The culture of DEF CON, and especially its evolution, is a very interesting one. When I first attended DEF CON, it was a bunch of seemingly scary hackers. Fortunately, it turns out most of them were amazing people.
As the conference grew (and changed venues several times), the culture began to evolve. The barrier to entry--in terms of being "accepted" into the subculture--lowered significantly. DEF CON stopped being a scary place, with goons that would "de-tech" you and throw you in the pool, and more of a mainstream event. For the most part, I'm completely supportive of where DEF CON's going. I'm definitely supportive of air conditioning in the venue, instead of standing outside in the sweltering Las Vegas summertime heat.
That said, though, it's not really a "hacker conference" anymore. Not more than its sister conference, Black Hat, or something like RSA, anyway.
DEF CON used to be about hacking. Not in the HN sense, but in the "illegal entry into networks" definition. Now, it's less about hacking and more about the actual information security industry; this is probably related to the fact that everyone I knew at the first DEF CON I attended (myself included) currently works in the infosec industry.
With growth, exposure, and the inclusion of white hats, DEF CON naturally became a recruiting ground for federal agencies, including law enforcement, the military, intelligence, etc. The 'spot the fed' game that began as a joke (with prizes!) soon seemed silly, since there were so many federal employees/recruiters/agents.
I'm all for DEF CON entering the mainstream. It's a conference and community that I've grown to love, and the lessons I've learned there (not to mention the friends I've made) have helped me immensely--both personally and professionally. That said, though, there's pretty much zero chance that this announcement DT made will have any effect whatsoever on federal agents, recruiters or representatives attending the con. More than anything, it's a huge publicity stunt.
After all, most of the staff and "old school" attendees work for "the man" now. For some, like me, it's just hacking for money; many, though, actually do work for defense and intelligence contractors. Should they be banned because of their affiliation?
Personally, I don't think so.
PS: If you're considering going to DEF CON and you've never been, you should! It's a booze-fueled learning, partying and networking event unlike any other. Plus, you get to hang out in Vegas for a weekend!