Well, keep in mind a fewe distinctions: Avatar, as we've said, is utterly top-notch state-of-the-art technology. It is the
future of 3D. By contrast, Toy Story is older technology
but it is an animated feature, and simply doesn't have the detail that a live action film would offer. Animation in 3D has always been easier to accomplish than live-action. Compare both to that short sequence in the last Harry Potter film. It was the latest and greatest available at the time, but still, at this point, we can call it
old technology. And it was live action, so it had the challenges to 3D that Toy Story didn't. I myself didn't really enjoy that sequence in the Harry Potter film.
So three different cases: New 3D, old 3D with animation, and old 3D with live action. I wouldn't judge new 3D based on past experiences with old 3D with live action. I wouldn't even judge it based on past experiences with old 3D with animation, though that's a closer comparison. The biggest deal about Avatar is the
same big deal that we had with Titantic -- this guy, James Cameron, has radically uplifted the technology of film production.
When we finally look back on Cameron's life and career, I think we're going to be able to see clearly how he has (perhaps under the covers or behind the scenes) contributed more to the
production of filmed entertainment than Walt Disney did (I know -- sacrilege!

). And unlike Disney, who sometimes got credit, and patents, for the work of great people who worked for him (it was actually Ub Iwerks who invented the multi-plane camera, and other Disney folks, like William Garity, who improved it), Cameron is the genius
himself -- collaborator, for sure, but he's not just the idea-man -- he is also the scientist and engineer as well. And not just for this new 3D technology (known as the "fusion" camera, I believe), but also going back to Titanic, The Abyss, Terminator, and some of his documentaries, for fostering the advancement of underwater filming and remote-vehicle control technology.
And that's the story here: Just like Walt Disney changed the nature of animation with technological breakthroughs such as Snow White, Avatar, aside from its own entertainment value, represents a similarly (or more) significant technological breakthrough in entertainment. The 3D technology that Cameron has perfected, with Avatar, is no more a "fad" than Disney's multi-plane camera was.