It seems the comparison of today's generation vs. yesterday's will be brought up, debated, and discussed forever, and though compared to the other two posters, I'd be considered quite young, I have to steal the wise Solomon's words here and say: There is nothing new under the sun.
I have to disagree with the comparisons of ipods to the Ed Sullivan show as a reason for teenager singlemindedness. Is it not simply an issue of all teenagers, everywhere, at all times (now and in history), to be mostly immature, self absorbed, and unaware of things that do not interest them? (One measuring stick for growth and arrival in the "adult world" was the moment I realized I no longer display these qualities.)
As far as illiteracy goes, you could substitute the word "ignorance" and yes, it is in large part due to culture. I'd say it is more of a behavioral issue than a technological issue, however, and might cite the lack of parenting, family dinners, and general accountability as more of an impetus than computers and iPods.
Technology merely has more room to thrive in a generation that seeks self-accountability and independence over the concept of community living.