At this point, no matter what we do with bandwidth allocation, it's still trying to get an elephant through a straw. The best we can do is get certain parts of the elephant first.
It's an interesting situation--I have a cable modem at home and I can get 8 or 9Mbps of download bandwidth, all for myself, for $50 a month. Drew has a 20Mbps connection for the entire university that costs over 100 times that. Why? Because commercial-grade Internet service is expensive. There's a much higher reliability factor, there's more work in supporting thousands of computers in a single connection, getting DNS servers, etc. Even if residential-class service would somehow work, the terms of service from the vendors specifically prohibits us using it for supporting all students. The point is the economies of scale aren't there--quite frankly commercial pricing hasn't come in to line with residential bandwidth pricing (and commercial bandwidth has come down considerably, and we purchase our Internet at a sizeable discount as part of a statewide consortium.)
I can certainly advocate for more money to fix the problem, but the fact of the matter is it's expensive and it has to coexist with all other financial priorities at the University (like paying faculty, renovating buildings, buying books in the Library and thousands of other things.) Technology presents to the budget committee on priorities, and if this is important to you, you should let your consituent representatives know so they can advocate for appropriate allocations.
Personally, I know we need considerably more bandwidth, and not just for Internet games but all Internet activities. There will be more and larger files needed to be transmitted to do research, create projects, and yes, to support legitimate non-academic uses of the Internet (3 years ago we didn't have iTunes for instance, and soon there will be movie downloading services.) We could easily spend a million dollars a year on our Internet connection, and I bet it might not be enough for some activities.
BTW, at least in the aggregate, we don't see any amount of bandwidth in the local switches in the dorms that would suggest a major saturation problem on the local area network. That's not to say there aren't issues in bursts or transients, which would be harder to detect, but our average utilization is at most a few percent of switch capacity, usually much less than even that.
I'd love to ramble on about how you can't just assume that the fact you spend $20 on a home router means we could do the same, but I'll stop for now. Suffice it to say that complexity increases exponentially when you have more people on a network, and that enterprise grade hardware costs many times the cost of home grade hardware, and although may not seem cost effective in raw numbers, is our only choice for a campuswide network.