I saw the boxing demo in last year's GDC. The camera had to be located somewhere low and looking upward the player at around 45 degrees upward so that it can both detect your x position and z changes (your hands moving forward).
I think that the usual problems with camera based motion controls will persist. With the EyeToy, for example, I had to place the cam at a particular angle and you move away until you fit into the game's character silhouette (which changes from game to game). It's really odd because I had to adjust the angle so I come close to the camera, then move away until I fit in the outline again. You do this over and over until you make the perfect fit.
And it gets worse when you have other players (a la hotseat), which is inevitable with EyeToy games because it's not fun playing alone. My young son, smaller than me, had to do the calibration process all over again on his turn.
They can fix it if they develop a camera that automatically rotates and zooms whenever it detects a face pattern. Maybe it's also possible to detect groups of people, and you select a player by waving your hand quickly over your face (a quick detect-undetect say 3 times will activate player selection). It can be coupled with a camera friendly controller like Sony's patented "Ball" controller.







