The attraction of Natal (Kinect, whatever) for me was the laziness it introduced. Honestly, couldn't give a shit about the games they showed but the dance one. But, erm, y'know the interface stuff -- yeah, apparently it only works when you're standing up.
From IGN [via GAF]:
Right now, Kinect only works when you stand. This includes menu navigation. All the cool options to grab a slider and advance through frames of a movie you are watching only work when you are on your feet. Kinect, we've been told, has problems handling your skeletal frame while sitting. The voice commands still work, but every game we've seen and even simple menu navigation have to be done with you out of your seat. That's not exactly how I want to watch my movies. If the focus for Kinect is creating games like Dance Central that naturally would require you to be off your couch, that's great. But I have to say, no one thinks "I am driving a car!" while standing up in their living room.