Everyone I've shown my Rift to has been delighted by the experience of being inside the game world. The immersion is unquestionably impressive, despite the many flaws. Oculus nailed the important parts of delivering real VR (low-latency, high-FoV) at a cheap price - but I don't think their success is assured yet.
Things like resolution will certainly help, though most people quickly looked past the chunky screen-door effect, and I'm sure it'll get smaller, lighter and cheaper too. What concerns me is that all but one of the dozen-plus people I showed it to experienced some degree of simulator sickness within 15 minutes, including myself. Most of those had no prior problems with fast FPS games, and it appears to me to be tied largely to the greater immersion. This usually reduced a lot after a handful of sessions, but I feel that this may be a real barrier to adoption - professionals can work through that, but I think a lot of gamers and casual users will have one go, quickly feel sick, and be put off.
More appropriate game design will surely help, and by minimising lateral & spinning movements and sharp accelerations, I think people can be eased into it. But this is outside Oculus' control, many games will do it poorly at first, and I'm expecting a pretty severe backlash when it hits the market, given the current hype. I just hope VR will survive it.