One thing that people need to consider: When it comes to games for Kinect, or even the Move, you're marketing the game to a smaller userbase. Now suppose a company goes all out and makes the next Legend of Zelda or Grand Theft Auto for Kinect or Move. Look at what they're sacrificing. They're trying to sell a game to a userbase of the 6-10 million people that own the console AND the peripheral as opposed to the 50 million+ people that own the console.
And they aren't just competing against the other Kinect/Move games that are on the market. They're competing against every other game available for that console for our dollar. If you have the option of buying Assassins Creed 3 and Fable: The Journey, what are you going to buy? Just because you have a Kinect, that doesn't mean you automatically buy the Kinect game--you buy the 360 game. If the one you happen to want is for Kinect, that's fine--but the more polished, higher profile game is the game for the controller.
For that reason alone, I think Kinect development is a little gimped. Why go all out to create something new and unique and polished when it already has to start the race with a handicap? So, while I applaud Lionhead for at least trying to make a hardcore, triple A Kinect game, I just don't know how well it will be done or even if it should be done. I think the way to go is to make the traditional games have optional Kinect support (which is the route that Sony seems to be taking) but, will that sell more Kinects? I'm glad I'm not the guy that has to figure that one out.
Maybe if somebody could come up with a Pokemon styled game that kids will fall in love with and uses Kinect.....
