Hi Topher,
I'm a recent graduate (a bachelor of art in computer science and mathematics, not of graduate school) and I now work as a Game Designer for THQ. What I do mostly concerns gameplay mechanics and creating level objectives and flows, in addition to roughing out levels for the art team to use as models.
I was accepted based on my level portfolio I had amassed over the years. I was also asked to generate a high-level concept for a map based on a fictitious game in about an hour, and then get grilled by the design team about it.
I've only been at this week a couple weeks now, but I'm really enjoying it. We are doing a third-person action console game, which presents a lot of interesting limitations that you have to design around. Drawbacks? Well, the hours
are longer than just 9-to-5. I've been putting in about 10 hours a day, to say nothing about crunch times. Another thing is that sometimes the work is quite tedious, btu there is often no other way.
I could have gone to graduate school, but I chose not to. I wanted to get inside the industry and see how I liked it, really. There's a ton I've already learned, just on the job, that no classroom could have really prepared me for. That sort of "real world" experience seems to be very meaningful in the industry. Most hiring firms ask that you have at least two years in the industry, or have shipped an actual game to market. A strong knowledge of C++ seems essential for developers. For designers, I think having a strong portfolio of existing work, and being able to think quickly on your feet, are essential skills. Gameplay design is hard to quantify. You can really only learn it from playing lots of games and analyzing them, and also from building your own creations. These are things you have to "feel," not simply "read."
Graduate school might be great for what you intend to do, but I would really encourage you to submit a resume to many different game companies and just see what results. To me, I tended to feel that the longer I stayed in academia, the farther I drifted from what I really needed to understand for the "real world." Thus far, I've sort of been vindicated in this belief, but that's always subject to change.