Easy generalization, more complicated reality.
My kids hate most of the newer stuff I've been checking out. They think it's weird and not cool.
Then again, they dig the Beach Boys and have friends who wear Led Zepplin t-shirts and shit. I actually bitched out a 16 year old girl for wearing a Zep T. Told her that htey had broken up before she was even born, so what's she doing listening to her parent's music? She was all like "What EVER. It was a great band!"
There's some nostalgia for ya'.
I don't like too much, hardly any, in fact, of what the kids listen to. I think it's monodimensional and boring.
And if "kid's music" was so damn interesting, you'd think I could find at least one radio station (or MTV video) that holds my interest for more than 30 seconds. No luck.
Hell, one of the most interesting things I've heard lately is something that Dusty Groove doesn't even carry any more because it didn't sell well for them.
I think you should make a distinction between "children" and "young creative talent". There's a gazillion of the former, and they rule the bizness, even/especially those marketed/hyped as "underground" (more of the same, that bunch is). Far fewer of the latter, and they are way, waaaaaay undergrond. And they're not "children", unless you look at anybody old enough to be your offspring as a "child". Dangerous game that is....
I know what kids listen to & enjoy, and have for several decades now. When you get grandkids, you probably will too. And like me, you in all liklihood will not be impressed. At all.
Until then, easy generalization, far more complicated reality.
Some of the discussion here reminds me of discussion/writing that went on during the "rock revolution" in the late 60s/early 70s. There was a lot said about how society was changing and how young rock musicians were most in touch with what was happening in society and in music. I also remember John Litweiler making the (astute, at least to me) comment that people should get off the teen age intellectual kick, or something to that effect - I don't have the quote handy. Not saying that it's the same deal today, but it's something to consider.
Certainly music meant more to more folks back then than it does today. These days, new music and most of the new artists who create it are throwaway items, pretty much forgotten in a few years, unless they have a good p.r. team behind them.
In the end, musicians will decide where music will go. Of course, these days it seems as if the media is more important than the music, but there will always be real musicians and they will take the music somewhere. Listeners/writers/critics have no control over that.