It is worth noting that Johnny Chung Lee, the CMU wiz of Wii headtracking/YouTube fame, works for MS on Project Natal now.
http://procrastineering.blogspot.com/2009/06/project-natal.html
Again, I want to see this in a real application and not one of MS's 'vision' videos. That said, if Johnny Chung Lee is impressed by MS's tech, than I am impressed too. He breaks down a bit more about *how* it works and identifies people in the "cloud" on his blog.