This isn't bunk - there's some good science behind it - but where this theory fails is in assuming that there's some sort of concrete divide between those who grew up on technology and those who didn't. Technology doesn't work like that. Every single year, advancements are being made in computers. If we work from the assumption that technology actually does alter the mind, and that the brain becomes less plastic as we age, then we also have to pay attention to the fact that the current generation of "young people" have been exposed to vastly different levels of technology throughout their lives.
I was born in 1986, which means that the internet really started to move into full swing when I was 10: 1995 was the year of HTML and the expansion of the true World Wide Web. When I was 15, Google finally came to town, and became the powerhouse of search, starting the slow transformation of the web into a pile of information to be sifted through rather than a series of interlinked pages. During my first year of college, Facebook came out, and social media started to hit it big.
So that's roughly how milestones in technology map to someone my age. But for someone just a few years younger or a few years older, those milestones would look very different by virtue of having different developmental contexts. For someone who's 15 right now, like my cousins, Google has been around for as long as they can read, and social media will be around for their entire high school experience. If we're going so far as to say that technologies cause changes in the brain, are we just going to discount the different contexts of a change in time?
Yet when people, especially those over 30, talk about "digital natives" what they're really referring to is a group of people with different habits from them; habits that they don't really understand, and which they see as less valuable than the status quo. For kids born today, it's very likely that their entire life will be online, pictures of them posted to Flickr, Picasa, Facebook, etc. at every step of their life. We're entering into the era of full recording, where everything you do is accompanied by a stream of data.
I'm not going to mount a defense of the digital lifestyle, mostly because that's a little useless; technology keeps going, and any such defense would have to be constantly updated to explain why new thing X is not so bad. But I can at least look at the recommendations that are being made by those people who would have you believe that the Internet, and everything that comes with it, is a bad thing. This camp puts out fear-based books like iBrain, The Dumbest Generation, and The Cult of the Amateur. These books are written not to help understand young people, but to comfort the old.
The most common thing they suggest is a move away from the internet. If people just spent more time face-to-face, and sat down with each other to have actual conversations, we wouldn't have this problem of narcissism, echo-chambers, amateurism, piracy, or immaturity. The argument, in essence, is this: the old ways worked, why would we change them?
This betrays a fundamental misunderstanding of both history and human nature. On the history front: those Baby Boomers who are making these claims grew up in an era of ubiquitous television. There were reactionaries then (and even now) who claimed that television would rot the mind and create a nation of illiterates. When recorded music made its debut, there were people who wondered why anyone would want to listen to something that wasn't live; and when recordings started to become popular, those same people lamented that live music was becoming harder to find. Every time any job is automated, there are those people who seem to think that the amount of work in the world is finite, and that this is a permanent net loss for employment rates.
And yet the world continues on. Any worthwhile technology is unstoppable, because it appeals to people in some way; it increases value, provides entertainment, or makes someone money. Turning back the clock to a "simpler time" is simply impossible, and nearly every reactionary claim about some new technology has proven to be unfounded.
Besides this argument from history, there is this argument from human nature; simply telling people that they shouldn't do something is never enough if that thing has some sort of reward for them. Websites and social media provide a psychological reward, as well as offering utility. Telling people "you would be happier if you stopped" is not good enough; to change people, you need to offer them a stiff punishment or a greater reward. This is why we have taxes, and why we punish people for their crimes.
Here's one of the difficult issues then: there is not some grand committee somewhere deciding how the world will be structured. There is no Council on Technology that decides what will or will not be made, and what will or will not be popular. Instead, the path of technology is built mostly by human nature. Social media are evolving along the dual lines customer satisfaction and profitability. Profitability, in almost all cases, comes from advertising, which is itself built around human nature; getting people to do things they wouldn't otherwise do.
And if advertising has taught us anything, it's that getting people to change their habits is usually something that needs to be accomplished by offering them rewards or punishments. So if you feel that people are going down the wrong path, the best way to convince them of the error of their ways is to set up a different system of thought that's more rewarding.