Netflix and Hulu Plus should be awesome. Depending on how much recent content that Hulu Plus has, I might drop my cable plan.
Avatar Kinect technology is cool, don't think I will be using the application though. They should definitely roll the tech out in their SDK so that devs can use it. Imagine a game like Mass Effect that detects your facial expressions while having conversations. Could add a good deal more immersion to games. The upcoming online poker game could make good use of it as well.