The girls bringing the suit are 100% correct. It basically denies to girls and woman the opportunity to compete on a level playing field in sports.
Problem with that is like Shane says, if you have sports based on sex, then there really is no level playing field in the first place.
And no, I don't think some trans kid should be playing on the girl's basketball team either. But it begs the question when women claim to be so "equal" with men, why they aren't made to just go out for the basketball team and then get cut just like all the boys do when they can't hang with some 6'8" junior.