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I was watching the Microsoft Conference on Spike TV and my 4 year old daughter was playing in the same room.  She went absolutely crazy over Kinectimals.  She made rewind it four times to watch it over and over.  As soon as I heard about the virtual pet idea coming to "Natal" I thought it would be interesting.  But even I had a smile on my face watching the demo.   Microsoft has a winner with that piece of software.  The concept may be nothing new, but the level of interactivity is insane.