Defeat having interesting gameplay elements works okay if there’s no effective penalty for defeat. I can definitely see how it’s hard to fit content into a game in other contexts, especially if the “game over” screen is the only opportunity there is for action to pause in some way; I think that’s something that makes it easy to implement “sex as an obstacle”, too – obstacles are expected to disrupt the flow of a game.
I’m more impressed when games work their sexual content into the game rather than leaving it out of its flow. I think that’s much easier for adventure games, text-based games, visual-novel-style games, etc. than other genres, though; sexual content needs room to be fantasized about, since current computer equipment usually lacks appropriate interface devices to snuggle up to you more directly, Rez aside.