For the most part, it looks like it's working. I remember going into one GS only a few months ago and there being a very large GameCube section, then going back about a month later, and the second was drastically smaller.
I think GameStop has actually gotten rid of almost all Xbox stock, it was the first they started to clearance out from last generation. And I think those PS2 games that are just in sleeves are actually games that don't have cases or anything. They're likely some back stock they had lying in the back room. My local store (that still has PS2 stuff) has both. And you can find games that are both just a disc in a sleeve and ones that are with a case and manual. So it seems more like they're just putting out the entire stock to get rid of it as opposed to actually destroying materials.
Though, they have done it in the past
So, some stores might be tossing stuff ... but ... I don't know, I know my local ones aren't.