In the age of the dinosaurs, when I was in college getting that eminently useful BFA in acting, we were given an assignment to write some scenes for class. The professor PILED on rules and restrictions and expectations until most of the class started squealing. A demented grin split his grizzled white beard. "It's easier to create inside the stricture of a box than without any constraints at all," he said.
This week, you've seen arguments both for and against genre. I'm not going to pile on. I'm simply going to note that genre only matters based on where and to whom you prefer to sell a story.
Traditional publishing houses have a tendency to stick pretty tightly to genre definitions. That's a distinct marketing choice these houses have made. If you can get all the Word Whores into the same room at the same time, ask us how many of us have had rejections with some variation on the 'we don't know how to sell this' theme. That's the typical response from the big NYC publishers to stories that aren't CLEARLY one genre over another. That being said, gross generalizations always have exceptions to prove the rule and unless someone had been willing to take a chance on a story they couldn't easily classify either as fantasy or as romance, there'd be no paranormal romance. So if you dream of selling to one of the Big Six (or however many there actually are now), your best bet is to stick to genre.
If your heart shrivels at the first hint of a rule about what elements belong in a story, you'll be happier subbing to small presses, e-first, e-only and indie presses. They seem less wed to strict genre categories. Your dystopian paranormal Inspirational (I dare you KAK! :D I'd totally read that if you wrote it.) would find a much warmer reception here. Go to any writerly conference and you'll hear editors from the NYC publishers say, "the small presses can take more and bigger risks." It seems to mean that crossover stories, or novels with many elements, aren't the hard sell in smaller presses than in larger, more codified ones. Happily, what we also seem to be discovering is that readers are less wed to genre definitions than the marketing teams at the Big Six have believed. Absolutely, readers want to be able to sort on things like 'romance' or 'fantasy', but clearly, few of them are going to freak out if there's a little of each in a single story.
I suspect that genre matters a whole bunch early in a writing career - you know - from the standpoint of "You have to understand the rules before you start breaking them." But once you've mastered the finer points of your chosen genre, why shouldn't you branch out a bit if that's what makes your heart sing?
For my part, I like genre because it's what I like reading. I seem to have a voice that shines in one genre above the others I've tried. Sure I write in other genres. In part because my current contract says I have to...but also because of what Linda said - keep stretching. You'll never know what you can do until you run right up against what you can't. But that doesn't mean I don't want a nice, safe writing home to go to from time to time.
So long as it's not a box I've stuck myself into to stagnate.