Although they remain very much a niche market in the United States, erotic visual novels and adventure games are fairly big business in Japan. A lot of the time, the characters and plot points are fairly generic, but every once in a while one comes along which is deemed good enough to be converted into an animation series or a console game. Typically, for either of these things to happen, the game needs to be able to stand on its own with the erotic content removed (oddly, anime based on ero-games don't usually end up as hentai, and of course erotic content is not permitted on consoles like the PS2). Think about what this means for a moment: the Japanese can produce porn that has a plot which is good enough to hold up even with the sex removed. Even the best of the Western porn companies can't really say that about any of their titles!
A recent example of this phenomenon is Kanon. The game was by a company called Key Visual Arts (if you google for their site then be careful, you may well come across NSFW links!) and is believed to be the inspiration for the "sad girl in snow" motif of the Megatokyo webcomic. It was turned into an anime a few years ago, and the anime was so successful that it was remade this year by the company who brought us the more recent "The Melancholy of Haruhi Suzumiya". Many of the voice acting cast are unchanged from the previous version, but the lead male is now being played by the person who played Kyon in the Haruhi series. As with all changes of this kind, some people like it, some people don't.
Unfortunately, some ero-game-to-anime conversions don't turn out quite as well. For some reason, there is a bumper crop of 5 of this type of anime this season (Fall 2006) and there are a few stinkers in the bunch. There are still one or two which are worth a look however: the aforementioned Kanon remake, and also "Yoake mae yori ruri-iro na" (Brighter Than Dawning Blue) which seems pretty interesting.
More information about the history of ero-games in Japan can be found at http://www.humblefool.net/stuff/ero-games.html