Google Blogscoped has some videos from Project Natal for XBox 360, Microsoft's new gaming system and Wii killer.
From what I saw, and from the video on GeekBrief, it's a gaming system as close to Sci-Fi (or is it Skyfye?) as I've heard of before. Voice and face recognition, full motion capture to put you in the game, magic scanning of your stuff to use for skins in game, no controller needed (imagine the wii-mote without the wii-mote), in system video conferencing and data / info transfer... all magic.
Will it be able to be pulled off? Maybe. It has no price or release date, and a lot of the video looks more like a "this could be technology in this home of the future" type demo under optimal conditions. If anyone can do it, MS has the $$ though, so lets see what happens.
Reminds me of the PS2 EyeToy. It did some really cool motion capture but since it was not a standard controller there were only like 2 games that used the device. The beauty of the WiiMote/Numbchuck combo is it being the default and only controller for the Wii, so if you are making a Wii game why not use some of the coolness. But with Natal, unless they make it a default controller on some new Xbox it is a question of why narrow your customer base by using Natal features.