IMO this is most exciting feature Kinect will offer us hardcore gamers from what I've seen so far. 
 
Having played Arma 2 and used the slighty awkward but very cool 'alt + move mouse' to look around while running, the head tracking headset seems really useful...http://www.youtube.com/watch?v=9wXx3vMy_AQ
 
If it works well this will be very useful in Forza 4, especially if you are using a racing wheel. But surprisingly no mention of head tracking in FPSs like Call of Duty. 
 
Any thoughts? 

I feel like Wii U would handle this better. With kinect, you would have to turn your head to look to the side window, but the tv would still be in front of you. With Wii U you could turn the controller with your head and look out the side while looking directly at a screen.

Yeah that sounds awkward in theory but looks very natural in the video link of Track IR^^^^ 
 
Wii U could implement it well on FPS's as long as the controller screen is your primary view but probably not so well on driving games where you are steering and moving left/right (to look around) at the same time.  
 
I hope we see more features like this that enhance the games we like to play already, rather than turn them all in to 'on rails' garbage. 

how does head tracking improves the FPS experience? in most FPS the players just want to shoot dudes in the face. Unless its more of an exploration/ puzzle (object hunt) game played from the First Person perspective.

i'm not some game design genius, but i'm always open to new concepts.

The WiiU (seriously, we need a better name) could get some crazy multi perspective camera going on.

eg: the tablet act as the sticky cam you place in-game so you can watch things going on

@theswoosh: Head tracking works great in flight sims and maybe in cockpit racers (haven't tried them) but not really great for anything else.

Basically, if your virtual body isn't glued to a seat it tends to be awkward. I've tried it in ARMA 2 and while it makes flying in helicopters amazing, when i'm playing as infantry it's just cumbersome.

I'm sure they can make head tracking make sense in FPSs but more likely it will contextually activate; full head tracking when you're laying prone and movement is limited, or leaning to dynamically peer around corners.

Good points. Looking forward to trying this out in Forza 4 and hopefully Ace Combat. 
 
Let's just hope they give us some good meaningful implementations of kinect if this is what they are pushing the next couple years.

that video explained head tracking very well. i was thinking of actual looking off the screen to see stuff. forza 4 looks pretty good for the use of headtracking to see the side of your car windows. 
 
since that video, i am kind of into head tracking. i don't think i'm going to be buying kinect though.