Here is a link to an article I read today: http://www.newyorker.com/online/blogs/books/2012/10/its-genre-fiction-not-that-theres-anything-wrong-with-it.html
I don't want to give a detailed critique of every point in that article but rather to (briefly) contest its main argument: "good commercial [i.e. "genre"] fiction is inferior to good literary fiction". There seem to me to be at least a couple of problems with this.
One is that the argument is perhaps basically definitional. Works of the "genre" type have a tendency to be promoted to the "literary" type whenever they have sufficient "literary" characteristics. Thus for example 1984 would seem to fit the basic criteria for being considered science fiction - being set in (at the time of writing) the future and having various invented technologies at least one of which is pretty central to the story. Its general dystopian feel is replicated across the sci-fi genre. Yet, because 1984 also has plenty of "literary" characteristics, it may end up being regarded as "literary fiction" and not "science fiction". Of course, if you consider "literary" characteristics (fairly reasonably) as the core of what makes something good writing, and any piece of work that has enough literary characteristics magically ceases to be "genre" fiction and becomes "literary fiction", then the best works of the latter type are always going to be better than the best of the former.
Secondly, consider the example of a specific work: Macbeth. If I were to argue that this is the greatest piece of literature ever produced I don't think many people would regard this as particularly unreasonable, even if they personally disagree. But surely Macbeth satisfies the definition of "fantasy" - not to mention sword-fights and castles and other things that tend to pop up in fantasy works, it has witches, who are not mere irrelevances but the driving force of the plot, as well as a ghost. You could perhaps argue it is "magic realism", but that is somewhat dubious, and magic realism might just be a sub-type of fantasy anyway. We might say, then, that the greatest piece of literature ever produced belongs to the fantasy genre. And that would seem to confound somewhat the argument of the linked article.
I think it's also important to note that, even if the best "literary" fiction were better than the best "genre" fiction, it doesn't follow from this that not all literary fiction is better than all genre fiction, which is maybe what is assumed in some circles. I've read quite a lot of "literary" fiction - prize-winning literary fiction, even - which is, in my opinion, really really bad. Pretty prose (i.e. prose which clings to a certain narrow and probably fairly arbitrary definition of what is "good" writing) cannot make up for a book being absolutely awful in every other respect. I would go so far as to suggest that "literary" works are more likely to be really bad books than "genre" works. Done badly, the latter stand a good chance of being vaguely entertaining whereas the former just end up as pretentious purposeless pseudo-artistic drivel.