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I wouldn't say that it stifles creativity, but expands LEGO to people who don't want to be creative with it.

You can treat it as a fun 3D Puzzle with step-by-step, or you can do whatever you want with it.

Neither way is particularly "wrong"

It is not wrong, but it does not force the kids to be creative in a way it used to.

I would rather buy some wooden trains and rails if my kids where young now.

you can always buy generic builder-part sets; they still sell them. Simply don't buy the overpriced kits.