I'm not so sure that what they suggested with MILO actually works, but something intermediary was already done in Starship Titanic in 1998. (and to a lesser extent in many adventure games before it)

"One of the most significant parts of the game is the conversation engine (dubbed "Spookitalk") used to interact with the robot staff on board the ship. Players type what they wish to say into the Personal Electronic Thing (PET) at the bottom of the screen. The robots' responses appear as text in the PET and are also spoken. The conversation engine works by interpreting user input and selecting relevant pre-recorded speech responses.

The Spookitalk engine was developed exclusively for the game by creator Douglas Adams and several programmers from The Digital Village, the company working with Adams to develop the game. The engine incorporates over 10,000 different phrases, pre-recorded by a group of professional voice actors. The recorded phrases would take over 14 hours to play back-to-back."

This is what I would like to see with voice input. Get rid of the list of preselected responses. Let me figure out myself what the relevant questions and responses are. Much better then selecting a stub which turns to come out quite differently then you had expected.
Maybe text to speech is not good enough yet, or takes too much processing power. Hopefully next gen we'll get more flexible conversation systems. I always thought it a step backwards when games discarded text input and offered a couple of preset options instead.

How about using your media? Searching for marketplace content? Getting your non-gamer parents to take an interest in your entertainment choices? Getting one step closer for your girlfriend to be a core gamer? Having a alcohol fuelled party? Hybrid games like Forza 4, Ghost Recon and ME3?

Or are you simply hating on an inanimate piece of plastic because its successful and your not part of the Xbox camp? Take your pick. 

Well for whiney core gamers who just nag like old wives (lol)...kinect implementation like this is small yet contributes positively to gameplay. 

Motion tracking and voice recognition are two different functionalities. 

Yeah, exactly.

For MS fans who cant stop taking their koolaid...MS did make it look better, intially than it acutally was no one is saying that this small contribution doesnt add to gameplay, most of us anyway and LOL to whoever thinks that Kinect games will make anyone's girlfriend a core gamer, not gonna happen. Didnt happen with Wii

True, but i was thinking more inlines of the actual motion tech, voice recognition is a secondary function to Kinect so I wasnt sure if MS would really add too much to that anyway

I have serious doubts about that claim... To say the least.

Well it's a start, just a disappointing one. As I said in my other post I was hoping for voice control to be used in the conversation system to get closer to the level of interactivity we had in the 90's. Instead it seems they're only focussing on the combat, which is my least favorite part of the game.

Hmm... I think I did see somewhere that you could just say the sentence of your choice in conversations instead of using the controller. If I remember correctly voice integration wasn't only about combat.

We'll get there eventually but these things require time and knowledge. I think they have to get as many possibilities first then get everything to work on Kinect (and mics). A separate dev team would be necessary just to make the conversation part.

If Kinect is going to be used I think I'd rather see it used in a way that doesn't feel like it's just tacked on. The Kinect has some really really cool tech in it - it'd be good if they used it as more than essentially as just a microphone.