Actually I think just having the head tracking for your view, while sitting in a fixed cockpit with your hands on static controls (HOTAS), will make this a killer application for flight sims and similar simulations. There's already head tracking for flight sims that lets you move your view around (TrackIR, Freetrack) and having relatively static controls like a HOTAS means you don't have to worry too much about looking at your hands. I ordered one of these dev kits and am looking forward to trying it out like this.

That would be quite tricky, since both the camera (attached to your head) and your hands could be moving in different directions at the same time.

A stationary, secondary observer (like a Kinect) would be several orders of magnitude more reliable. All that's left is for someone to make a game that actually utilizes that idea.

Lack of tactile feedback will always be an obstacle to that. Still, I share your optimism. Sounds like a great idea in principle, and we're closer to it than ever now.

Maybe even closer than you think. We've already done simulated tactile feedback in monkeys! http://io9.com/5846275/biotech-breakthrough-monkeys-can-feel...

I think the real future of this is some sort of spinal substitution where you can override the nerve response for the entire body.