That seems pretty bad, yeah.
I care about humanity. I care about myself! You're welcome to sterilize yourself, but i don't think I'll follow.
The scenario you describe doesn't involve pain, but that doesn't mean it isn't bad. An empty, dead universe seems worse to me than one teeming with thought.
The thought experiment wasn't to end sentient life in a glorious generation of virtual hedonism, just humanity. Let the octopi build their ~own VR escapism pods.
I think people really underestimate resources needed to run these VR paradises - it needs mass and energy!
I can fully imagine a totally disconnected VR dwelling civilization that still has hordes or self replicating bots of doom that dismantle planets and stars only to make more memory and compute.
Might very well be more dangerous than a "normal" space faring civilization.
The scenario you describe doesn't involve pain, but that doesn't mean it isn't bad. An empty, dead universe seems worse to me than one teeming with thought.