WHERE DOES VIDEO GAME MUSIC STAND?

There's still a fair amount of retro sounds in modern games. Basic waveforms like square and triangle are still very common and popular in electronic music because they are clean and pretty, albeit higher quality ones. It's important to keep in mind that Mega Man sounds the way it does due to hardware and software limitations and not the vision of the composer, so now that those limitations are less of a factor music composers aren't going to stick to them unless their aim is to be retro which does still happen (ref: Scott Pilgrim on XBL/PSN).