Rating System

What do you think about the ESRB Rating System and its effectivness?
As a reminder, the ESRB ratings system contains the following ratings:
E [for everyone] E+10 [everyone 10 and up], T [for teenagers] M [mature] AO [adult only].

I think that the current rating system is good with one exception: The way games are and will be rated on the Wii. I remember all the problems caused by the release of Manhunt 2 (a survival horror game) that was the first game to recieve a AO rating on the Wii, and infact, for a long time. They of course dulled it down since almost every store that carries video games will not sell AO rated games.
The major concern with the game was the way that it causes more 'interaction' with killing methods. Instead of pushing buttons you make the movement to wrap a telephone wire around an enemies neck.
Was the ESRB right in their rating? I think that the AO rating was a little harsh, but then I'm not someone who will take video games and apply them to real life.

So, what are your thoughts?