Y'know, back in the good old days, I played a lovely expansion called Red Alert 2: Yuri's Revenge. It had a new faction, added units, different maps, and a new campaign.

Personally, it might as well have been Red Alert 3. It wasn't as much an expansion as a new game. Certainly, the campaign was a slightly shorter than the original Red Alert 2. But it also cost slightly less, so it balanced out. To me, Yuri's Revenge is the perfect model of how an expansion should be. More quality game (with actually new content) at an appropriate price.

The problem with DLC is, that the more you cut it up, the less satisfying it is. If all the Fallout 3 DLC were put into an expansion pack, assuming the DLC was linked story-wise or something rather than the rag-tag additions they are now, it would be much more satisfying. For all the DLC (Point Lookout included), if it were somehow related to so their combining made sense, I'd pay for it, as long as it was appropriately slightly lower priced than the original game.

Now, I'm not really a big supporter of free updates. Certainly, they're great, but hardly a neccesity. I think the ideal model would be to first have a quality standalone game, which is most important. Then, adding new game ideas and content into an expansion pack sometime later. Meanwhile, patches could have some tiny bit of extra content (a few new maps/objects/whatever depending on the genre) If there is anything radically game-altering, or not able to fit into the expansion because it feels odd in combination, make DLC. One or two at most, not five.

On the subject of quality DLC, let's take Oblivion as an example again. There's the infamous Horse Armor, but also Battlehorn Castle, Frostcrag Spire, etc. These are not really DLC. They're payed Mods. (Which are technically DLC, but you get my point)

Now, if an expansion such as Knights of the Nine would include some of these, then it would be great. You've got a large amount of new relating content, with a bit of extra things served on the side. Luckily, such an expansion does exist, but not until after everyone had already bought those things as DLC.

Er..Patches=Updates, at least, from my perspective. That aside, even if you consider the two completey different, free updates are usually necessary for PC games, to fix bugs, and etc. Especially in online games, those are almost an absolute necessity, both for bugs, and for balance if there's a PvP side of the game.

Everyone needs a laidback game.

No one has thus far said on of the main reasons of DLC: stop people from selling/buying second hand games.

Once you finish a game once, maybe twice, you'd generally let it get dust, unless it has a strong multiplayer component (and you like it), or 'random maps' (feasible for strategy games, never seen on FPS). Having that game gathering dust, you'd be tempted to sell it for half the price, directly or to a specialized vendor. DLC is bait to make you keep holding your game copy for the longest time possible, so that other people will give their money to them (instead of a second-hand game dealer).

In the early cases of DLC (the infamous horse armor), it was basically a rip-off. Gamers reacted voicing their discontent, and the game studios (at least the better ones) are tuning the size of their DLC to be 'good enough' for people to feel liek they are buying something worth the price tag.