Much has been speculated in this thread about the usefulness of the current LDS presence in Second Life, so I thought I might volunteer some facts, as one who is intimately involved with the LDS project in Second Life (SL).
SL may seem like nothing more than a game to some, but as a veteran of online community architecture and development, it is apparent that SL is almost as much a community as the town I live in. There's a strong sense of ownership among the regulars, and it's not just another internet chat site. Believe me; I've seen virtual communities spring up fast and die fast due to a lack of sustainability, usually because members become disinterested fast by the lack of things to do, and eventual lack of things to talk about. SL is constantly evolving.
There is opposition in all things, and SL is no different. Yes, there are plenty of places in SL in which you wouldn't want your bishop to find you, but that doesn't make the entire place bad. As I recall, there's a bar on Main Street in Salt Lake City, too, but that doesn't mean we shouldn't ever set foot in that city.
Now, with that out of the way:
The main purpose of the LDS island in SL is a missionary approach. Three months ago, we received non-member visitors to the island at a rate of about one every 20 minutes. Currently (and especially on Sundays), we are receiving non-member visitors at a rate of one every three minutes on average, and on Sundays it's more like one every minute. These stats do not include the LDS members of the island, or other regular visitors.
All of these non-members had to do some kind of search to get to the island, whether it was on keywords like "LDS," "Mormon," "organ," "genealogy," or whatever. Nobody lands there by accident. When they get there, we have signage and interactive links all over the place that point to various resources at lds.org and mormon.org.
We have a replica of the tabernacle, a standard meetinghouse, the RS building and a few other elements, but they are for demonstration purposes only (although we do stream general conference into the virtual tabernacle. Last spring, 30 of us gathered online to watch Conference together in that space). We hold no kind of services in the buildings, though, and are quite clear about that.
Those of us involved with the LDS in Second Life project are in full agreement that the offline world is of primary importance. But numbers don't lie -- people online are curious about us, and our beliefs, so we are answering that curiosity with a responsible place for them to find answers, and hopefully lead to the desire for more information from missionaries. Sure, we could instead wander around other savory parts of Second Life and enjoy it, or not do it at all, but many of us have chosen to keep this project alive to satisfy a growing missionary demand. It's a fun hobby.
Finally, to say that SL is a game is to say that none of the avatars wandering around have real people behind them, and this is simply not true. Every person walking around SL is a real human being, and when they are looking for answers to their questions about our faith -- questions which they may be too intimidated/insecure to ask people offline -- we are more than happy to open some doors. There are places in SL where entertainment is the focus, but not on the LDS island. It's a good work we've undertaken, and we're happy to do it.