In AAA game development, it's C++ or go home. People can argue all day about the relative merits of Java, but C++ certainly has a domain in which it's superior to other choices.
C++ has a domain where it has a large foothold and extreme inertia. That says nothing about its fundamental merits.
Your statement is also misleading for another reason. Core engine logic might be in C++, but actual "game" logic is increasingly being shoved into scripting languages like Lua.
Concern for and access to low-level implementation details is one of the fundamental features -- and in some cases merits -- of C++. In applications where program execution speed is important and you can't scale out by adding machines, C++ is a better option than dynamic languages. See: game engines. Yeah, you might add a scripting layer on top for some of the logic, but you can't write the engine in a dynamic language and get Battlefield 3.
The other merit of C++ is that it's object-oriented, however awkward its implementation may be (insert Alan Kay quote here). The fact that it's both fast and natively object-oriented is why C++ for the most part replaced C in the game development community, which once had as much C-based inertia as it currently has C++-based.
Is it a beautiful language? Noooooo way. But it has merits.
Edit: before someone responds with "But computers will get faster and make C++ obsolete..." People's expectations for videogame graphics tend to increase as better graphics are made possible. It's a tough fight against an equilibrium, and the fact that the graphics of today will eventually be possible with dynamic languages in the future won't matter for as long as games are unable to reach perfect photorealism -- better-looking future games will come out, and Crysis-level graphics will look dated and shabby by comparison.
For an example of previously-heralded graphics become obsolete even within a single console generation, when the first screenshots of Oblivion came out years ago there were people who truly couldn't believe that they were realtime and in-engine -- but dear God, look at Oblivion now. It's not hideous, yet, but it isn't pretty. And there's no way you could write that in pure Lua today -- not even at ten frames per second.
