I think its best use is in making controls more intuitive.  Basically a highly advanced form of context sensitivity.

 But any game that requires magic or psionic powers would be interesting because you would actually have to develope skill in those powers and I think that could be VERY addicting. 

 Well is certainly easier to think than to move,  this is a step closer to be inside the game. i mean... is like having psychic powers :P

This tecnology can (and probably will) get better. Maybe can be adapted to videogames.

And as i said, is closer to virtual  reality

 Any reason we can't use both, and at the same time perhaps? Imagine a Star Wars game with that set-up. Wii remote for your lightsaber and this for your force powers? I'm all for anything that potentially ups your interactivity or immersion with the game.

I doubt we'll see much out of this, core gamer base is often resistant to change. Hell most developers still haven't thought to use Headset's in a single player game. I've played a lot of 360 games were someone is talking to my character over a radio in thier ear, why not set-up an option where you actually hear that stuff over the headset?

Supposeably the orginal Manhunt did that, and the mic would give you away if you made noise. That was a few years ago. 

Sony has been developing this for about 2 years now (ill find a link after I finish my essay for college, feel free to find and post it up yourself)

Haha, they used Gary's mod for part of the video. I'd recognize those watermelons anywhere.

The tech itself is really cool. Maybe this will be part of nintendo's next innovative control scheme? (wishful thinking..)