I think Serious Game can be an excellent educational tool for today's digital natives as they frequently preoccupied with gaming as a leisure activity, so why not use it to teach them in a serious way.
Serious games have been extensively used as educational tools in many institutions for quite some time. In our university we have used many games in courses related to policy making, safety and security, logistics and transportation. We have a dedicated gamelab to produce training and educational games http://www.seriousgaming.tudelft.nl/
You can also check our publications on Research Gate. Game based learning is an active research topic and several journals publish on this topic.
Serious games and "gamification" in general have gained a growing interest, not only as research areas but also as powerful and promising tools for a large set of applications in various fields, such as politics, marketing and business, health, education and training. The use of games in educational contexts has become more popular, innovative tools have been widely recognized as having considerable potential to foster and support active learning.
I always use serious games in my courses with my students and every time I give them to evaluate the activity with a serious game they are very satisfied and request for more activities in this style.
One of the serious games I use with my students is Yoogle (http://etraces.constantvzw.org/yoogle/spip.php?page=start_yoogle)
not sure if this has been mentioned already, but one of the best examples of using a commercial game (a Triple A game even) for educational reasons is Portal and Portal 2. The game is remarkable because it is one of the very few non-violent shooter games. However, the game predominantly focuses on physics and thinking skills, which make it very interesting for learning some of the basic laws of physics, for example.
Fortunately, Valve, the company behind the Portal game series actively supports the interest in their games. You may find a lot of information on how teachers may use the Portal games here: http://www.learnwithportals.com/, http://www.teachwithportals.com/.
Here's a scientific paper on using Portal: http://www.sciencedirect.com/science/article/pii/S0360131514001869
Serious Games as an educational toolis very effective according to our experience. Tygron started 10 years ago as a spin-off from the TU Delft (same as Shalini) and has developed a lot of different serious games over the years. Nowdays we have shifted our focus to the urban planning professionals but because it is so effective we always kept a small education department. The Climategame is still used by many universities all over the wolrd.
The learning buy doing experience that students get with this realistic game is very effective. In the Tygron Engine students also get the opportunatie to make their own projects. Lectures has dicribed this as a highly intrinsic way of learning. It is good to keep in mind that not only playing the game has a learning element, also developing your own game is an educational value.
to get an overview, I found this paper quite helpful:
Backlund, P., & Hendrix, M. (2013). Educational games - Are they worth the effort? A literature survey of the effectiveness of serious games. In 2013 5th International Conference on Games and Virtual Worlds for Serious Applications (VS-GAMES) (S. 1–8). http://doi.org/10.1109/VS-GAMES.2013.6624226
We're between Phase I and Phase II on Motion-Controlled Gaming for Neuroscience Education, a project that targets 5th graders, teaching them about and interesting them in careers in neuroscience. The project is with NIH's NICHD. We're comparing learning via the standard lesson and our games with significant results. Phase I was about manual (hands-only) immersion, but in Phase II we are proposing to introduce the head-mounted display (HMD). I'd be happy to discuss the project with you if that would be helpful.