Online games are huge in parts of Asia, especially Korea. But I believe that the online gamers there are predominately for PC's. As game consoles online gaming develops even more the next generation, I bet it will garner a portion of those PC online Asian gamers.
As for MS not including modem use for their online games being a bad move is questionable. For one, alot of their online titles would have to be scaled down to be playable for 56k. Another thing to note that is online games this generation are more of a preparation for next generation as far as garnering online gamers. By having only broadband, MS is ensuring it gets alot of the BB users now, and then next generation when 56k online games are much less than the already small amount they're now, they will have those gamers already on board. And finally, MS has over 1 million online gamers, while Sony has 1.4 million (going by each companies most recent #'s). Given the userbase of each system, it seems that MS BB only online was a good move rather than having 56k.