Yeah. Personally, lens flare drives me nuts. It's like instagram - you can show me a perfect picture, but instead you're applying a can't-see-shit filter.
If you frame it that way, I think B is more believable, because it accounts for the television/monitor, the controller, and the general fact that the player doesn't experience any of the physical repercussions of his/her actions. If B was what was really happening, then of course there would be camera effects, and of course I would need a monitor to view the actions from the camera, and of course I would need a controller. If A was really happening, then why would I need any of those things? So A is a bigger jump to immersion.
Lens flare in photography and videography tends to be seen as a defect and something to be avoided. That's why lenses have use expensive chemistry for anti-reflective coatings.
When lens flare is used it should be a conscious choice.
Lens flare tends to be reserved for scenes in space. And most of these scenes are not real, but created in a computer, and the flare is added to create "realness". Well, that's fine. Sometimes it works, sometimes it's mocked. ('NEEDS MOAR LENS FLARE' has some useful web search results.)
But, for games, I tend to like lens flare, and it tends to help immersion. (If used carefully.) I have no idea why. It's probably a good idea to allow users to turn it on or off.
If someone is going to start to nitpick about the unreality of B versus A, then they ought to also address the lack of a dynamic focus and changine depth of field that our visual system handles so automatically that we are unaware that it is even happening and that CG doesn't do this.
The Source engine does a great job with this, but it can really get in the way of gameplay.Bad "bloom" can really hurt your ability to aim at something when emerging from a dark corridor into bright daylight; depending on the game, this may be a feature--but is generally unfun.
