Yes, gentrification is a double-edged sword. When middle- or upper-class families purchase real estate in lower-class neighborhoods and replace existing dilapidated structures with renovated or brand new ones, it does raise the cost of living in those neighborhoods beyond what lower-income families can afford. Those lower-income families, consequently, are forced to move to the very kinds of neighborhoods out of which they were just forced by the circumstances of gentrification, which are beyond their control. That is an unfortunate byproduct of gentrification.
The positive aspects of gentrification can be argued to outweigh the negative consequences. Having lived in Washington, D.C., for many years, I witnessed such processes turn dilapidated neighborhoods into revitalized communities, which benefits the city as a whole because it raises, considerably, the tax base that, in turn, can be used to improve living conditions for those who feel compelled to flee to less-expensive and often more crime-ridden neighborhoods. When communities are "gentrified," new businesses open up, such as restaurants, bars, boutique shops, and so on, to cater to this more affluent clientele, which provides jobs for lower-income individuals. Neighborhoods once avoided by middle- and upper-class families because of the fears of crime and the depressing nature of slums become desired destinations for young upwardly-mobile families.
Gentrification's victims, such as the ethnic-oriented cultures that existed in these neighborhoods, are, indeed, replaced by other, sometimes more culturally-diverse inhabitants. It is often socioeconomic class rather than ethnicity that determines the demographic transformations that occur in communities where gentrification occurs. Interestingly, in Washington, D.C., gentrification was often initiated by the gay and lesbian communities, who took it upon themselves to buy dilapidated, often abandoned housing developments and turn them into refurbished, vibrant neighborhoods.
It is not only gentrification that affects neighborhoods, either. Often, the development of a new venue for local professional sports franchises--in effect, construction of new stadiums and arenas--has as much effect on lower-income families as does gentrification. The most affordable and desirable real estate, from a geographical perspective, is often in the worst neighborhoods. Real estate values in such neighborhoods are, unsurprisingly, relatively low, and such neighborhoods are located in inner-city areas where city officials desperately hope to entice new businesses. Once older, lower-income housing developments are torn down to make way for the new sports arena, multitudes of small businesses sprout up to profit off of the waves of humanity expected to frequent the stadiums and arenas. New, expensive housing developments are similarly constructed nearby that are, by design, beyond the financial reach of all but the wealthy and upper-midde-class.
In short, displacement of lower-income families by the process of gentrification can be--but not always is--deleterious to the interests of those families. The benefits to the city as a whole, however, almost always outweigh the negatives.