I think this is a great question, that's honest about the nature of a skilled employee's relationship to an employer. I don't think it's at all about the employer pretending to care about the employee - it's a straightforward way to find out what the prospective employee wants (other than loads of money, which this employer doesn't have), so that the employer can try to offer it to them. It's classic SPIN selling.
As far as what I want to hear... I don't have some "right" answer in mind. The question also helps me understand the person a little better than a typical interview question might. If I know their long-term goals, I can have a better idea if they'll be happy with us and we'll be happy with them.