I'm not a particularly skilled player, so I do like having difficulty options of some form. I have also improved considerably and am working on continuing to get better. The only way I can do that is if game difficulty stays just a little above my current level. Enough to challenge, but not to give up in frustration.
One of my pet annoyances in games is when I die a few times and start getting messages reminding me I can turn down the difficulty level. The game seems to be mocking me. You aren't good enough to be here, why not just switch to easy mode, you loser? The occasional tip I could probably handle, but once I know the option's there I see no need to hammer the point. Unless someone out there in game-developer-land really enjoys teasing people like me, which is valid I suppose.
Adaptive difficulty is more subtle, and increases game accessibility without seeming to poke faces at me in the process. I have a slightly dubious relationship with this method though. What if the game's just laughing at me behind my back now, instead of telling me to my face?
Theoretically, adaptive difficulty should be a great way to make games accessible to a wide range of people, and give me that level of challenge I'm looking for. In reality, this idea has quite a long way to go.
The major issue for me is actually choice. In a non-tweakable system, adaptive difficulty must naturaly make assumptions about how much of a challenge I'm looking for, and how many failures I will tolerate. I'm a relatively patient and determined person, so those systems will probably pitch their challenge just a little lower than I would like. It can make the wins less satisfying. Discrete difficulty levels are a bit limited, but at least they give me a choice.
My sister recently linked me to Infinite Adaptive Mario. It uses player performance to determine procedural level generation, as opposed to the more superficial tweaking of current mainstream games. It doesn't solve my particular issues, but I think investigating different approaches to difficulty managment is useful.
I've never really got the hang of controlling platformers using a keyboard, so a PC Mario game is going to cause me some problems. After a few too many deaths the levels do become easy... and also kind of pointless. Thankfully it doesn't resort to that too quickly, and it's useful that how far you progress before dying is important to how far the difficulty is dropped.
All in all it's an interesting idea, and one I'd be interested to see used elsewhere. My major concern about choice still stands, though. I look forward to the day when I can more commonly control how I want difficulty management to behave.