"Just Stop" is a semi-regular feature which examines and picks on features prevalent in gaming stories, characters, and mechanics. The point of the feature is not to insult your favorite games, but rather to show how certain conventions could be improved or scrapped in favor of better ones.
Notable Offenders: Many console Final Fantasies (automatically excluding X and XII for "I'm from another world" and "evil twin!" syndromes respectively) and other Squenix games, Lost Odyssey, Silent Hill 2, Fear Effect 2, Haunting Ground, Baten Kaitos, The Witcher, S.T.A.L.K.E.R., Second Sight, Prototype, Arc the Lad II, D2, Baten Kaitos, Street Fighter (series story), Shadow Run, Xenogears, XIII, Shadow Hearts, Magna Carta, Sonic the Hedgehog (series story), and many, many others.
The chance of meeting a type of amnesiac in real life is extremely slim (unless you work in a field which would cause you to encounter them frequently), yet I'm willing to put money down that nearly every gamer has played a game which uses a form of amnesia in its plot. Are amnesia plots that interesting? Not terribly, and especially not when the forms of amnesia presented are extremely unrealistic. Amnesia is often used as a plot device in order to solve other common problems with writing- namely creating a relatable protagonist and introducing plot twists or complications.
There are several explanations frequently used for amnesia in games: psychological trauma, major physical trauma/death/near-death, and magic (and, yes, I am qualifying futuristic technology under magic). The disturbing thing is how few and far between believable occurrences of amnesia actually are. Instances of "I don't know who I am and can't remember my life up until some convenient plot point" are not only frequent, but unbelievable. If you can't remember who you are or any of your life then you are not suffering from amnesia, but it's possible you are suffering from a form of dementia.
Why is amnesia so frequent, then? Glad you asked. Loss of memory allows writers to withhold information from the player to make the story more interesting at some later point when they unveil the "what a twist!" a la M. Night Shyamalan: a fact which, until this point, was unknown and will change the player's outlook or interpretation of events. The problem with using amnesia to introduce complications to the story is that it's possibly the easiest and laziest way to make a story work. Don't want the players to know that all the main characters had met before they were introduced to each other in the game? Make all the characters forget their lives using some sort of magic (unfortunately, that scenario has happened more than once). It's painful to see so many great stories get nearly ruined when such a story telling cliché is introduced. Amnesia can absolutely ruin a good plot by making the player feel betrayed and patronized by the writers.
Having said that, there are several games which use amnesia to make great stories. The best use, I would argue, is by creating the unreliable narrator- a character who a player can sympathize with and trust until it is revealed that the character was lying (unknowingly) all along. Sadly, once amnesia has been successfully used once, it's hard to replicate and match that instance. Arguably, Silent Hill 2 has an iconic use of unreliable narrator that is difficult to surpass.
Removing the amnesia element from an already working story is a problem. In order for the story to be cohesive, a piece of information has to be willingly withheld from the viewer. If memory problems are forbidden, then a protagonist would have to willingly deceive other characters and generally be a jerk. Players are just not as sympathetic to heroes who engage in long-term deception and mind games with their party of trusted comrades. Imagine if Cloud was consciously lying to Aeris and Tifa about Zack and his (nonexistent) role in SOLDIER- it would make him seem even crazier than he already was. A player generally wants to believe that the protagonist is reliable because it makes for easier transition into the gaming world.
So what now? Writers should be challenged to avoid story telling clichés that have been used in practically all writing and mythology from the beginning of time. There's no excuse for defaulting to "It was my evil twin" or "I can't remember those first 17 years of my life" to create a plot twist for the player. Indeed there are games coming out all the time which can use plot twists without resorting to use of amnesia and hopefully there are many more to come.