The squirrel on speed is part of the problem, the other is turning around, which is going to be needed in pretty much any FPS.
Something as simple as walking around corners in HL2 doesn't work. On the first turn you can sort of manage, but it's uncomfortable. On reaching the second corner in the same direction you have to look backwards from where you started, and are getting tangled in whatever wires you're attached to. Using a keyboard doesn't work.
So the alternative is using the mouse and moving the camera while your head is in place -- that's right when nausea starts setting in.
Navigating a 3D world comfortably seems to almost require an omnidirectional treadmill, unfortunately.