Gamasutra has some info from this weeks' Gamefest about the Xbox Live Vision camera.  I got a chance to play Totemball, and I have to admit it was quite a lot of fun.  Harder than it looks (imagine playing an old-school Tank game by moving each arm up and down).  Gamasutra has a video of how it's going to work.  

Right next to that booth was DigiMask's Face Renderer.  That was pretty cool to see.  The camera takes a couple of photos, then masks your face to a detailed avatar.  It's one thing to see a face of someone you might recognize in real life (ala Madden), but it's another to see your face on a character. 

Read "An Update on Microsoft's Xbox 360 Live Vision Camera Technology" at Gamasutra.com.

[Edit: Changed title at Gamasutra]