I dont think MS is trying to cover up a poorly working piece of hardware. I tried Kinect at E3, and I can confirm that it is responsive and accurate. The tech is pretty cool.
I do think MS is trying to shield the poor games from being picked apart by the media. Again, I played Joyride and Kinect Sports... and I cannot see either reviewing pratcualrly well.
It really all comes down to math... if Nintendo can develop a quality family/casual/non-core games and they get shredded and disemboweled by a media industry that is strongly against those types of games, then what hope does MS have when they develop a poor quality family/casual/non-core game? MS recognizes this, and its a prudent move to embargo in this case. If I was them, I would still embargo even if the titles were as good as a WiiSports Resort, just because negative press from the gaming media would still occur.
Its really a no win situation. In 2005-2006 Nintendo realized this and invested strongly in creating buzz around other forms of media and bloggers who were not a part of the gaming media. A grassroots approach like that is neccassary. MS just hasnt had the time to do it.
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