As a gamer myself, I have to say, I am pretty psyched up about this.  Check out the video.

 

Microsoft explains that IllumiRoom “augments the area surrounding a television screen with projected visualizations to enhance the traditional living room entertainment experience” and “can change the appearance of the room, induce apparent motion, extend the field of view, and enable entirely new game experiences." Kinect captures the geometry of a room and adapts projected visuals “in real-time without any need to custom pre-process the graphics.”



Being a PS3 fan myself, I hope Sony will catch up quickly.  This may be what gets me to buy a 360 finally.  At some point, people will just use a whole room and replace the TV altogether with a projector don't you think?