I remember being excited about it, because it would bring certain visions to life better. I still think electronics work better for certain songs, depending on the song. Likewise, I think live instrumentation works better for others, so I can relate to your feeling that this was the death of good R&B. I do remember feeling like a lot of the newer stuff just sounded canned and that artists were kinda "getting over" and taking advantage of an era where less talent was needed. The best, imo, was when you have an artist who could play but simply used the electronics to enhance their sound rather than depending on the electronics. At the very least, someone who understand music composition. At worst, you get RZA crafting a beat on that Guitar Center feature. When it's done well, either can work better for the same song depending on the artist performing it. I think the Prince song you posted in the OP is better with live instruments, but that could be because I always thought the original electronic version was too bare to the point that it was almost annoying to me. I always felt like Prince was capable of making that a MUCH more interesting song than the album version.

I recently listend to Meshell Ndegeocello's Ventriloquism, and it's pretty phenomenal what she does with some of those songs. She gives Atomic Dog an incredible ambience through live instrumentation. George to dance, Meshell to relax. Nite And Day and Sensitivity going from electronic sounds to more live instrumentation were nice. Especially Nite And Day. What she does with Waterfalls and Don't Disturb This Groove is cool too.