Nah, it's good PR for MS either way. Good or bad is still PR in the public eye. Most of the mainstream press seems to be positive, whereas a lot of the gamer press seems to be on the skeptical to negative side by contrast. But everyone seems to have an opinion, which means mission success.
And they haven't announced pricing, so I'm not sure where this $200 price tag is coming from. MS is not stupid enough to think they can charge the price of a console for what is effectively a new controller/control scheme if they expect this to have mass market appeal.
I'm thinking it will probably be a $50 camera peripheral if they're planning on making it a 360 add on.