The problem with Kinect - and pure motion control in general - is that such control must be within the following limitations:
1. The only control is movement.
2. The movement control is supposed to be intuitive and therefore must mirror real life or else be some sort of signal extraneous to the experience of control within the game, such as, "Let's take a break from playing" or "Select this menu item, please." This is due to the fact that there is no real life analogue (such as when selecting an item off of a menu, where in real life we use rather complicated speech to accomplish this), or, ironically, the real life analogue to these actions is pushing buttons (such as pausing a video).
3. All of this control must be done within the range of the camera.
The critical flaw with Kinect is this third limitation because there is one thing that is absolutely crucial to many video games but the natural way to do it (in accordance with the second limitation, above) cannot be done within the third limitation: movement through space. Or, in other words, walking.
One with a keen eye may notice that in every single Kinect launch title and indeed every upcoming title, not one has controlled movement through 2D, let alone 3D space because of this functional limitation. Games either put the player "on rails" or present an experience whereupon the player mills about in an area (a la Dance Central
The reason for this is simple. It's just not possible. If one's walking was tied to walking in the game, it wouldn't be long before you walk out of frame and are no longer playing the game (or rather, no longer in control of the game). This is especially problematic because there isn't a whole lot else we do with feet besides walk.
Now, "on-rails" games rarely to never produce quality game experiences. A quick look at reviews shows that it is solely games that come from the "milling about" camp that are the critically acclaimed launch titles. Suddenly, the future doesn't look quite so promising.
That said, this problem is not specific to Kinect, but it is aggravated by Microsoft trying to show the world that they hold the future of gaming, and that it lies with pure motion controls. But even they are gracefully acceding their limitations with the promise of "hybrid" games.
This isn't to say that Kinect is terrible, however. It is quite an impressive piece of technology that has yet to realize full potential. That said, even if it were a one-inch cube that perfectly captures your motions and instantly transforms whatever room you're in into a holodeck, this problem with movement through space will still persist. Pure motion controls are not the future of gaming, at least not what is a thought of as games right now.
What is the future, then? Well, it still might lie with Kinect: voice commands. Get that on everything and perfect it. If it proves to be reliable, it will add a new definition of immersion in gaming. Besides that, the aforementioned hybrid games do open up a lot of avenues as well.
(Original images: 1 2 3)