Peter Molyneux came out during Microsoft's E3 2011 press conference to unveil Fable: The Journey, a Kinect-exclusive adventure set in the world of Albion that revolves entirely around gestural controls.
The game appears to progress with an on-rails methodology, presenting you with enemies and situations that require you to make specific hand gestures to cast spells, attacks, and the like. The demoing developer made all sorts of wacky movements throughout the demo, launching various magical hadoukens and electric spears and what have you at various evil creatures.
This was one of several Kinect exclusives that were purportedly leaked earlier in the week, lending some credence to that whole thing. Dance Central 2 demo should be forthcoming, I'm guessing.