So I just watched the video of Natal for the first time and I'm a little surprised at people being so excited about this without first thinking it through.  The first thought that popped into my head was "air guitar".  The girl is sitting there driving with no steering wheel in her hand.  Dad changes her tire with no air gun in his hand.  The people ring in on the game show with no buzzer in their hand.  Basically they're a mime sitting in front of their TV.  Activities like that where you'd have something in your hand in real life make sense to actually HAVE something in your hand while you play.  Kicking the soccer ball was neat until I realized that to aim a soccer kick, you need to kick at a certain place on the ball.  Without an actual ball to aim your foot at, how do you know where you're kicking?  The device makes more sense for activities like the fighting segment where the kid is doing karate and looked decent for the navigation through the interface like when they were choosing a movie.  But seriously, how many of you are going to be trying on dresses via this thing with your BFF?

Once the Wii had been out for awhile, some people felt the novelty of the controls wore off.  I kinda agree although I still enjoy my Wii very much.  I can see people absolutely going wild for this thing when it comes out as they try out some new games for it and every game in their library that's been patched to it for backwards compatibility.  Soon they'll realize that they prefer a controller for their old games since that's how they were originally designed (think about some of the Wii games that you'd rather play with a classic controller or the Wii-mote on its side) and the new games, while highly interactive, will feel shallow without the use of any tactile feedback or the use of buttons for more complex control over what you're doing.  The motions themselves only get you so much control over what you're doing in the game.  You need buttons.  Maybe they'll have games where you have the controller in your hand and use Natal at the same time.  IMO, for many people the gaming part of it will fall by the wayside except for at parties and all that will be left is using the interface to navigate.  If this ever sees the light of day and isn't vaporware as some suggest, I suspect a lot of people will quickly regret their purchase.  Especially if it is as expensive as some suggest.  If you buy it the day it comes out, I sincerely hope you enjoy it.  I think we're all better off waiting until after it's been out awhile and seeing if it's going to provide us the experience we were expecting.  I have a feeling once I finally get a 360 (hopefully by the end of the year), I won't be giving this a second glance.

P.S.  I don't think Sony's motion controls are all that big a deal either.

http://www.gametrailers.com/video/e3-09-project-natal/50013

Gizmodo seemed to enjoy themselves quite a lot:

http://gizmodo.com/5277954/testing-project-natal-we-touched-the-intangible

Testing Project Natal: We Touched the Intangible

By Mark Wilson, 8:23 PM on Wed Jun 3 2009, 38,952 views (Edit post, Set to draft, Slurp)

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One hands-on with Project Natal would make for a nice story, but it wouldn't be complete. So we're giving you two full sets of impressions on Microsoft's motion-capturing E3 bombshell.

Matt Buchanan tested Project Natal today, as did I. Here is his personal take on the technology right alongside mine. We did not share our independent experiences before pasting the text below. Neither of us were allowed to shoot what was happening on screen—hence the crazy pics of our bodily reactions, and that intensely audible racing-game video.

How Natal Works
The test system was an ordinary Xbox 360, connected to small PC and camera that simulates the final Natal rig. There are two cameras—one RGB, for face recognition and display video, and one infrared, for tracking movement and depth. Why infrared? The eye doesn't see infrared light. And when you combine an infrared camera with an infrared emitter (also part of Natal), a room is flooded with a spectrum of invisible light that works in the dark.

Natal also has its own internal processing system handling an unspecified amount of the heavy lifting behind Natal's cleaver image and speech recognition. It breaks the human body into 48 points tracked in real time, and it can sense your whole body in Z space, or depth. In fact, on a heat map that measured depth, my hands appeared hotter than my shoulders—because they were closer.

Natal is so smart, in fact, that, if your room is narrowed by a pair of couches, it can signal to a game to narrow the level. It can see about 15' x 20' of a room, according to project leader Kudo Tsunoda's informal estimation.

Breakout
Matt: My first taste was talking to the father of Project Natal, Kudo Tsunoda and watching as his simple, small hand gestures were mapped perfectly onto the screen. He started up the ballsmacker demo you might have seen in our liveblog, knocking a swarm of balls into wall with every part of his body.

When Kudo gestured to me try it, I jumped right in and immediately started smacking at balls with my hands and feet and knees and arms and head as one ball exploded into many, like a virus, until I was doing sad white ninja jerking and jumping movements. Kudo didn't tell me how to "set it up" or what to do. I just did it. You have to realize, Kudo towers over me. I didn't have to calibrate it to my body size, or stand in a weird way for it to adjust. It just worked. Well, until I broke it at the end—it froze up after a few rounds and had to be rebooted for Mark. Hey, it's an early tech demo, so don't read into it. Until that point, it worked remarkably, incredibly well—better than I expected, honestly. The bright fluorescent lights were turned off and on, and Natal didn't flinch. My real movements translated exactly how I expected them to—the precise position, velocity—90 percent of the time, no matter how ridiculously I moved, and some of the other 10 percent might've just been my own bad timing. But the result is a remarkable sense of control. Immersion.

Mark: Microsoft loaded the 3D Breakout demo we saw at their press conference. I stepped up to a white piece of tape right after Matt, and given that I'm 4 inches taller, Natal needed to account for my larger size.

After about 10 seconds, the blue, ghost-like figure filled in. And he was both taller and bigger-handed than Matt's avatar. Natal noticed that I'm a bigger guy. It made no adjustments for the fact that I'm also better looking.

The first thing I noticed was a slight lag I hadn't intended. It's not horrible, but my avatar moved a hair more slowly than I did. That didn't stop me from reaching up, spiking the imaginary ball at a wall imaginary bricks, and then flailing around to keep up with 2, 3, 4, 5 and more spheres flying at me at once.

My avatar recognized both my pitiful kicks and swipes. And while my avatar never left the ground when I jumped, this turned out to be but an animation limitation within Microsoft's tech demo. My wireframe preview image and heatmap did leave the ground. Besides, this is nitpicking. On the PS2 I played Nike Kinetic, something a bit similar. And I always wanted to be having fun. But on Natal, even in a stuffy windowless room surrounded by Microsoft execs, I was having fun. (Disregard my stern, focused face in these pictures.)

Burnout Revenge
Matt: The Burnout racing-game demo was a little more abstract—in one sense, I almost wished I had a wheel to turn, a pedal to press, because I wanted the feedback. I had trouble getting used to "pressing" the gas, which you do by moving your right foot forward. I threw myself off-balance by taking a ginormous step toward the Frankenstein's lab of demo equipment along the wall (upon which I could see myself represented in infared, covered in boxes like smallpox). But turning my air steering wheel, I felt completely in control. A lot of that was the software—it registered even the smallest pivots of my elbows that sent my forearms right or left—but the way it responded exactly how I expected it to is what made it feel so natural. Which is the real key here. It feels natural.

After I hit full speed on a straightaway, I tried to do a 180. I crashed into a wall and died. Normally, that'd make me bad. But I couldn't stop smiling that I'd held the future of gaming control in my hands—and it was simply air.

Mark: As soon as Matt crashed, I greedily jumped in, asking him if it was OK but not waiting for him to answer. I wanted to play Natal more, and I've played a ton of Burnout.

Burnout showcases a few important points for Microsoft. First, it's a real game that's been on the 360. So Natal doesn't weigh down on the processors so hard that you can't play games. Second, it requires fine motor control.

I raised my hands in the air, mining a steering wheel. I hadn't given the system any time to scan my body after kicking Matt out, but I stepped by foot forward, signaling the gas all the same. The car accelerated. I twisted my arms. The car turned just the right amount.

Microsoft had clearly tweaked the Burnout code a bit, forcing the car to feel a bit more like a powerful sedan than a street illegal beast out of some Fast and Furious sequel. And I'm guessing that Natal's ever so slight control delay was masked by the feeling of a looser-driving steering wheel that we find in more standard cars.

So I floor it, growing confident as I wave through traffic and slowly build speed. I reach maximum velocity, throw my foot back to break, cut the wheel and toss the car into a spin. Yes. This feels right. Just right.

Holy shit.

But Natal can't work this well. It just CAN'T. I need to break it, teach this Microsoft prototype a little humility. What if I stand on my tip toes and steer eight feet in the air?

The car handles fine.

What if I kneel on the ground and steer?

Yup, it still works, save for a moment when my knee shifted and I tricked the machine—a fair mistake, even by my highly ridiculous dork standards.

Closing Thoughts
Matt: Project Natal is the vision of gaming that's danced through people's heads for decades—gaming without the abstraction of controllers, using your body and natural movements—which came more sharply into focus when Nintendo announced the Wii a few years ago. I haven't been quite this blown away by a tech demo in a long time. It looked neat onstage at Microsoft's keynote. Seeing it, feeling it in person, makes me want to believe that this what the future of gaming looks like—no buttons, no joysticks, no wands. The only thing left to get rid of is the screen, and even that'll happen soon enough.

Mark: 2010...or maybe even 2011...is just too long to wait. I want Natal now.

I suspect a lot of people will have fun...at first. That's kinda what I'm saying. I think the novelty will quickly wear off.

They forgot the more important question: what if the camera can't see your feet (you know, people usually have living rooms with tables on them, not empty rooms like the ones in those tech demos).

It depends what games it gets. During the video they played at E3 the game the kid was play as Godzilla demolishing planes and building looks fun and games like that will sell. Plus that racing game also looked fun. Natal has lots of potential it all depends what games and software are made for it.

That Godzilla thing looked like a Playstation Eye game.  It looked like an incredibly shallow experience that will be fun for about 1/2 hour.

its interesting when they showed this teen scan his actual skateboard using Natal and then use it like a balance board to play a skateboard game.

You don't fully understand the purpose of Natal if you think that it would be better to replace some of the actions with a controller of some sort (such as a buzzer, steering wheel, etc).

Basically in your OP you use the Wii as an example of how some people grow tired of the motion controls and wish they had a traditional controller. Well, guess what, the Wii still sells amazing and hasn't worn off yet. If Natal is good and has good software, neither will it.

Also, Natal is targeted at the 60% of households that don't own any console yet, that means this targets people that not even the Wii has yet.

He just scanned the board.  He didn't stand on it to play if I recall.  He stood on the floor.

I want to scan my golf clubs into Natal. I want a golf simulator that tells you what you are doing wrong on your swing.