I have had Kinect since Thursday, and my impressions are quite a bit different then yours, though I would guess it's a matter of perception rather than factual disagreement.
Specifically:
- The lag inbetween your action and on-screen avatar varies by activity. I would guess it's at it's worse in Reflex ridge, but I haven't found that game to be unplayable or in anyway adversely affected by the miniscule lag. For example I have a 4 year old son who has no concept of "lag", and he can jump the obstacles with little or no difficulty.
- Motion controls were not meant to replace standard controls on the dashboard, but rather used during your Kinect play sessions, where you wouldn't have a controller with you. For example, you can turn on your system, then say "XBOX, Kinect", then "XBOX, Play Disc", then use your hands to pick which Kinect Adventure (or whatever) you want to play. Having to use a controller to get to Kinect Adventures, just to turn it off would make little sense. For these occassions, motion and voice controls work perfectly.
- Finally regarding space, this seems to be pretty variable, though I hear mounting it higher gives you better results. I don't have a huge room, and my kinect is mounted about 2 feet off the ground and we can play fine. I've seen you tube videos of smaller spaces working though.
I've had a lot of fun with Kinect and am looking forward to picking up Kinect sports and Dance Central. While Kinect might not be for everybody, there is definitely some fun to be had with it.