They aren't saying Sesame Street is bad, they're saying television has not been proven to offer any developmental advantages for children under two. The American Academy of Pediatrics (or Pediatrics Association or whatever their name is) says children under two should not watch television. Lots of parents (and sitters and nannies and daycare centers...) plop kids in front of the TV all day and that isn't healthy. Kids need to interact with their world-- they need to touch things and run and jump and explore and they need people to interact with them in a way television cannot.
Sesame Street has a great reputation. The concern seems to be that people will see the Sesame name and assume this is a really educational, developmentally appropriate product. The truth is, there is a lot of controversy around TV for kids in this age group.
Personally, I don't have any problem with a parent or caregiver actively watching a video with a young child a couple times a week. Used as Sesame Workshops invisions these DVDs they sound fine to me. But the reality is lots of people park their kids in front of the tv as a babysitter and I don't think that's healthy for a very young child. That's also not Sesame Workshop's responsibility.
Sesame competes for viewers in an extremely competitive market. Their competition is locking in viewers at younger and younger ages. Sesame needs to stay competitive. There's a market for this stuff.
I'm curious about the DVDs and would like to see some of them. I'm not opposed to the idea. But I also understand where the criticism is coming from. In a way it's a compliment to Sesame-- that people see the Sesame name and take it for granted that the product will be good for their kids. I'm sure Sesame Workshop put together a quality product, but personally, I didn't want my kids watching videos when they were 6 months old.