After watching a lot of the Giant Bomb Kinect streaming stuff, it seems like a lot of the launch games just having tracking problems, I'm going to guess it's more of a software issue than hardware at this point. Kinect Sports seemed to be the worst of it, with about half the games just not tracking properly for Jeff and Ryan.
The one game that got me really stoked for giving Kinect to my kids for Xmas was Dance Central, which seems like a blast, and worked really well. Leave it to Harmonix to get it right from the get go, hopefully more developers will find ways to take advantage of the hardware and release more fun, innovative games.
If not tho, I think Dance Central alone makes the $150 for the hardware worthwhile. Hey, I spent $100 on my King Kong HD-DVD player 360 addon, so I'm used to buying hardware that only really gets used for one thing .