frostcircus: While I don't want to put words into a dead man's mouth*, it's a safe bet that Kurt wouldn't have agreed to this.
*generally I don't want to put anything into a dead man's mouth
I don't see how it's hurting any artist. I fail to also see how Cobain would have objected. Dave Grohl was also part of Nirvana and both Nirvana and Foo Fighters are represented in both Rock Band and Guitar Hero.
Which makes me wonder this: Are you actually mad about Kurt Cobain, or do you not like music based games and are finding a controversy to latch onto? If you don't want your music heard by the world or for people to have fun playing along with it in a game, then I think you might want to take up another career. I listen to some fairly underground and unique music but I don't know any one of those artists who wouldn't want their music heard by everyone.