you could also make Eye-Toy like games where you have much much more interactivity with the objects on the screen.
I don't think you would necessarily need 'an acre' of space to make a sizable game out of the stuff around you. If they could incorporate a very good zoom and some very detailed miniatures
you could make some interesting terrain that could never be the same twice and easily manipulated during play.
But also think of the broadband connection between systems, you could play a RTS against me in
TYP's back yard, or a fighting game aginst Bill on his dresser. Playing Pikmin 3 in your moms garden.
The possibilites of what could be done with this tech and user interaction seem very interesting.
(I know the above examples seem a little gimmicky, they're just quick examples)
I'm not saying that this will make it into a next-gen machine, but I think its invlolvment into gaming could be "revolutionary"