Natal is already close to the 30fps mark of latency.  I'm sure you can find some use in a real 3D evironment using head tracking... the guy who did the head tracking trick with the Wii-mote is working on Natal.  Watch the video on youtube and just think of what you could do with that in any given genre of game you may play

assassinate all the sony's defense force? :D

Natal has to hit several milestones to be successful. As others have stated the keys are

Price - Natal needs to be bundled with existing systems at today's prices or $99 standalone with game

Must have killer app
Must have strong 3rd party support

Those are the only remaining questions. I think all of the performance issues have already been addressed given the demonstrations shown and the stage of development.

Price and 3rd are also pretty much a given IMO. The big question remaining can they get a killer app ready for launch. I can think of 3 likely candidates - head tracking Halo, avatar sports and Rare adventure type game.

I think most people are vastly underestimating the impact Natal will have.

Thing is. Developing for Natal will be just as expensive as any other HD game development, plus developers will be just as ignorant about how to make games for Natal as they were for Wii.

It will fail, at least that's what I believe until I see some killer software and not just some deveopers talking about how "awesome" it is.

Harsh, yes. Fair, definately.

There are issues.

Price -- $100 for Natal after $200-$300 for an Xbox 360 or $200 for a Wii (new user question, obviously if you own a 360, its a sunk cost).

Latency -- most people want LT 50 ms for on-line games, 100 ms will seem really slow to an experienced player (that is one-tenth of a second).

Software -- how many good games will there be? if just over one-third of Xbox 360 owners buy it (roughly the same percentage as who have Wii Balance Boards), you are looking at an audience of only 11-12M for a game. The WiiBB has few games with an install base of over 18M. Why would Natal be any different?

Uniqueness -- eliminating the control does not appeal to many gamers (especially the general demographic of the Xbox 360).

Mike from Morgantown

Size Recognition: Will Natal work with small children? Will a 3 year old be able to bat at balls with Natal like they can swing a tennis racket in Wii Sports?

Finite Movement: Natal can see you swing your arms and legs and even turn your arms enough to turn a steering wheel, but it can't see your hands turn in minute angles or determine your wrist position at all. What does this mean? Well it immediately eliminates options of sword fighting and advanced finite sports like those found in Wii Sports Resort (Bowling, Tennis, Archery, etc.), which require precise positioning of the hands and wrists.

Basic and Uncorrectable Control Limitations: No controller means it's not realistically useful for something like a shooter. You can't point and shoot and be accurate without some form of IR. You can't move without walking in place or stepping forward and backward which is not only uncomfortable, but signifficantly slower than playing with a joystick. Any genre that requires a lot of inputs (shooting, fighting, action, adventure, action RPGs, most sports games, platformers, and pretty much anything that requires movement on any part from the player in any forward or backwards direction) will be limited to very minor and most likely inconvenient usees of the motion controls. A limit not present in controller based motions.

 You got to be joking. Didn't That guy used a PC in his demo  which already had head tracking software and hardware? That's not much of a trick since it has be done for years with a IR camera and lights.

You don't have to wonder how head tracking could be used  in games as there are already a long list of PC games that   supports head tracking. They are trying to get head tracking support in Need for Speed Shift now.

Please tell me we don't have to stand up in order to use it... (Yes, a sad complaint, but gaming is a comfortable process. I have never seen anyone play while standing up, even on the wii)

^^No, you do not have to stand up.  Well, that depends on the game I guess.  But Natal can handle a person sitting down.

Thers only 2 things for me - Price and games (that support NATAL).

1. Price - Simply put, I wouldn't pay more then $70 (the price of a game) for NATAL. Simple as that. I'm not paying $71.

2. I need there to be good games for it. I'm not buying NATAL so I can play a bunch of lousy minigames like "kick the soccerball" or "lame dancing game 3". I would want lots of cool games like sports games where it picks up your motion or a boxing game would be fun where you have to punch and dodge in real motion.