Lara Croft's evolution over the years has seen less sexualization:
I think we've seen a shift towards better characterization and less sexualization in some games - but yeah, there's worse stuff out there than ME.
Games like GTA, Duke Nukem come to mind as probably the worst when it comes to portrayal of women.
On the flip, we also have games like Alice McGee with no sexualization of the female protagonist:
I used to love the original Phantasmagoria for some reason. Yeah, it had a sex scene in it, but it was part of a decently portrayed plot line without over-sexualization of the character itself. Oh .. and then there's The Sims which is as close to a gender neutral game as one is ever going to get.
Overall, I think many developers do go into creation of games with the intent of sexualizing female characters as opposed to giving them fleshed out characters [no pun intended] --- but there are still games that do focus on characters. There have been some very positively portrayed female characters in games: That female character from "The Longest Journey" -- I think April Ryan was her name or something comes to mind.
In fact, I think some developers actually focus more on positive feminine portrayal when they really set their mind to it --- whereas, I cannot remember a single game where the male protagonist showed any sign of anything other than brute strength force or wanting to wreak massive havoc to get the job done. Barring of course the point and click adventure games of the past - which just aren't popular any more. Oh -- and yeah, Alan Wake was a pretty decent male protagonist as well.
That said, I would say there are greater chances of women getting better portrayals in video games in the future as opposed to men who will probably always suffer from being shown as macho men on roids.