Natal has to hit several milestones to be successful. As others have stated the keys are
Price - Natal needs to be bundled with existing systems at today's prices or $99 standalone with game
Must have killer app
Must have strong 3rd party support
Those are the only remaining questions. I think all of the performance issues have already been addressed given the demonstrations shown and the stage of development.
Price and 3rd are also pretty much a given IMO. The big question remaining can they get a killer app ready for launch. I can think of 3 likely candidates - head tracking Halo, avatar sports and Rare adventure type game.
I think most people are vastly underestimating the impact Natal will have.