To me this is the logical next step in pushing gaming foward.
I think Nintendo is most likely to go this route because fighting in the hardpower arms race does not lead to success for them. I think no matter how powerful their next console is it still won't be successful especially if it has a standard interface. Moreover hardpower is reaching a point of diminishing returns anyways. The Wii was successful because it was innovative and that wow factor because it had something that was never seen in gaming before. I think if executed well this get the masses, especially the casuals, very interesting in console gaming.
Nintendo can bundle it with the next called (called Sii?) and utilize its Augmented Reality for even more immersive Wii Sports-like experience. Imagine looking down at your floor and seeing a golf ball on a tee and swinging your Wii mote and seeing the ball fly into the screen and through the course in the screen. Imagine having a full panaromic view of the golf course just by turningyour head.
Imagine a Metroid Prime game where you use the wii remote and nunchuck but also has head tracking and the HUD outside of the TV on your lense and you can interact with it by "touching" it.
I think I read somewhere that Miyamoto wanted a video game to fill up the whole room. His dream can be realized with something like Google Glass. It can stream all the information from the console through bluetooth and incorporate gyoscropes and accelemetor technology.
I think the following video can convey a little what I can imagine what can be done with it in gaming http://www.youtube.com/watch?v=b7I7JuQXttw
