I think the problem is exactly what you say. People will need to stay busy because of evolutionary and psychological traits but they will feel frustrated in any case. They won't be able to get profit from what they try to do, or if we are talking about a hobbie, any result from it will be ridiculous compared to what a machine can do. So frustration from being non lucrative or from being insignificant compared to the AI alternative.

That's why the current artist crisis. Right now artistic skills give you some kind of self steem and social status. A skill not everybody has. Now that machines can do it, the market will go to the superior fast and free and spectacular alternatives (I think they are awesome), so no money to artists anymore. And in your social circles, once AI art is widespread ,people will move from saying to you "wow you are an art genius" to "meeh you took a month to do that sh*t AI does much better in 1 sec"?

I don't oppose AI but I think we'll need to find alternative ways to satisfy the needs of achievement, self improvement and social value. We could have infinite food, housing, entertainment, art. etc. but those are not the only needs we have.