Listening to the linked Jaffe Youtube reply, I get the same impression of him that I got on the Bonus Round (
http://www.gametrailers.com/episode/bonusround/303?ch=1 ) : He sounds like a perfectly reasonable guy that's obviously passionate about what he does, but he doesn't have good social skills or tact. His point is valid: used game sales on recent games (we're talking the $45-caliber stuff) hurt new game sales and in turn hurt the developers of that game because they don't see any money from it. And mind you, when you whittle away all the costs that go into developing; producing; and marketing a game the developer sees very little return per sale in general.
Where I have a problem with him is that he seems to assume that the way to prevent these used game sales is to try to force by any means necessary stores to give them a portion of the sales. Now, until very recently I wasn't very fond of trading my games in. I've noticed, though, that of the games I've traded in very few of them have actually been good games, and those I did trade in were ones I really didn't think I'd ever play again. This means I've traded in very few Nintendo games over the years, for example, and conversely a great number of mediocre 3rd party titles. I know at some point down the line I'll want to play those games again.
With the economy as it is, I think the only true way to incentivize someone to keep their games and not put it back into marketplace is simply to make a better product, and then support that product with further incentives like DLC. Is it fair to the developers that they have to find ways to incentivize us to pay them by proxy? No, but it's the only way that will probably work and it increases the quality of the industry as a whole. Look at Falllout 3, for example. It's already an incredibly high-quality game to begin with, but when you're done with it you also have 5 DLC adventures you can still experience in that universe that don't detract from the original experience. I can't imagine why anyone would trade that game in, because you're getting so much for your money, and most of it is awesome.
Unfortunately, we're approaching a very precarious crossroads. As my father (who works at a major computer software company) constantly reminds me: when you purchase a piece of software you're not purchasing the software. You're purchasing a license to use the software, and the manufacturer has the full legal right to tell you what you can do with it. With DRM in place as it is you can't trade in or sell your newer computer software, at least not as easily. What I worry about is if we can't find some sort of equilibirum on the used game problem, game companies are going to push to make our industry follow the rules of the computer software industry. One way to that is through digital distribution, and another is through legal action. Jaffe is borderline threatening both of these as eventualities. If given the choice between that or having game companies take a portion of the proceeds from used game sales, I think we may have to put up with the latter to prevent the former because I don't think this tenuous status quo we have right now can last.