Here's another question - is there a distinction between art and craft? I think on some level, all creative and productive (as in, a product or object is created or changed) works are art works. Some of them may not be very high quality/ acclaimed/ original/ meaningful/ well intended/ etc. but they are all technically "works of art" in a certain sense. In another sense, however, certain activities may be merely commercial or routine, and not "artistic."
I think the "work put in" analysis is a good one, but what about other software? Is norton anti-virus a work of art? What about something that has no UI, but is only a script that runs? I think that the answer to what makes a video game art, as Nick says, is going to be different for everyone, but here are some factors that I think relate:
Authorial intent: did the creator(s) have artistic goals.
Aesthetic Qualities: can the game be described as beautiful (visually or otherwise)
Originality: is the game different than other games or merely a clone of something else
Audience perception: does the game seem artistic to the players
Challenge to the medium: does the game challenge the conventional qualities of video games
Communication: does the game serve as a mode of communication for the creator in expressing some idea or emotion
Relevance (probably a bad name for this quality): does the game engage in a cultural critique or dialogue about games and art?
some other factors may or may not also support a view that a game is art:
Quality: how well made is the game
Emotional effect: how are players effected emotionally by the game? (This is different than communicating an emotion.)
I'm skeptical of these, for example, CoD is well made and manipulates emotions, but fails to be as artistic (in my personal opinion) as many games that aren't as well made or emotional.
Anyway, I think these factors are probably a good starting point, and to demonstrate, consider Jason Rohrer's Gravitation for example. I would argue that Jason had artistic goals and intended to communicate ideas and emotions. I would say it's aesthetically interesting and unlike almost any other game in many regards. Additionally, I would argue that most players of Gravitation explicitly regard it as an "art game." It challenged game conventions in a number of ways, and I think it is engaged at least on a small level, with a discussion of the role of video games in culture.
What do you guys think about these factors?