Virtual reality is still in its infancy and hardly has a large enough following to make such a difficult assessment. We would need more people involved with VR to study any long lasting effects as well as more convincing virtual reality. That being said, here is what I'll speculate:
The first few years will be relatively tame. People will easily be able to discern reality from the virtual world. There is just too much information in our world that can't easily translate into the virtual. Tactile sensation, taste, movement, interaction, and a vast amount of laws of physics will only be simulated at a very primitive level. At best, people will have chance instances where they think "woah, I had that exact kind of experience within VR". But in no way will the bridge between what is virtual and real be blurred.
10 years down the road it will start to become a little more hazy. Virtual reality will be very convincing, but not perfect. Just about everyone would still choose to live out real experiences because there will be subtleties that still won't be replicated in VR and so people will want to live out the full experience. Still, a lot of people will use VR constantly for the sake of convenience and ease of use. And of course there will be a great deal of experiences that can only happen within a virtual environment. Some people will get sucked into VR similar to how people already lose there lives (literally) to WoW. They will disregard the real world and choose to live their primary life in the virtual one. However, this is nothing new, the only difference is that I think this effect will impact more people than our modern day internet and games.
20 years down the road is when I think we are approaching that existenZ/matrix level of VR. Many people will start to be confused as to whether they are in the real world or not. I think all the senses will be perfectly stimulated just as they are in the real world. As to how this will change our own neuroactivity, that's hard to say. Perhaps people will be much more open to what they define as "real". Your drive to work will be just as real as them riding on the back of a mammoth while firing lasers at demons. No doubt will people perceive things very differently and have very different personalities compared to a life without VR.
I think how VR will change us will depend entirely on what we choose to expose ourselves to. I just hope that people be careful in the matrix. Personally I think the way you act in the real and virtual world should be the same. Someone who makes decisions in VR based on the fact that there are no "real" consequences are treading a dangerous path. I'd imagine that slowly they would make those same kinds of decisions in the real world without any regards for the consequences just the same.
I'm sure I will be off by a large margin on the effects of VR once we see its progression. There are just way too many variables that can come into play in the coming years that we can't see with our current knowledge. Okay, end of rant, I may have went a tad overboard with my train of thought.
TL:DR will the line between real and virtual be indistinguishable?
0-5 years: no
5-10 years: somewhat
10-20: more so
20+ years: yes