Microsoft was caught faking their demos for their Eye Toy style motion controls for the past two E3s.
And first had reports constantly talk of horrible lag between arm movements and response.
You can't play games while sitting down.
You need to have a relatively large area completely clear in whatever room you are using it in.
There are lighting issues that cause the system to have trouble recognizing motion.
There are clothing issues that cause the system to have trouble recognizing motion.
It doesn't recognize fine motions like finger actions.
It only supports two players.
It should be obvious why Microsoft was forced to fake their demos and so far there has been almost zero real world demos outside of carefully controlled showings with people Microsoft is certain are going to hype the product.
Not that any of that really matters. There isn't any game even remotely interesting or fun that Microsoft has show for the system. When Nintendo showed off the Wii they were confident enough to let everyone at the very first E3 where it was shown play it and had games that both gamers and non-gamers really wanted to play.
Most likely the only people who will end up buying this shoddy tech from Microsoft are the same ones who jumped on the dead HD-DVD format.