What ill effect do you see it having on society? If none, then your argument basically comes down to "ick!", which is not a good argument.
I understand people crave sexual gratification, that's human nature, but I think products like this will only serve to compound the problem, make more people who feel this way look inward and ultimately more unfulfilled and lonely.
Would research and technology not be better served if it was used to help break these barriers and bring people together - rather than isolate them in their own lonely existences.
I am aware a lot of this is my own opnion, I just think it's pretty disgusting that this could be a possible future.
I'm certain when photography was invented, some of the first photographs were of naked people. Undoubtedly someone was concerned about the future of humanity then, as well.
In the end, people still like sex with other people more than they like sex with imaginary people. I doubt that will ever change en masse.