http://media.coveritlive.com/media/image/200906/phpyLQuuw_DSC7403.JPG Instead of straight up copying the wii-mote, they went for minority report style control use.
No more controller, full body tracking and recognition. The device can use facial recognition to sign you into your account, also able to do voice commands.
Hilarious part: The E3 demoers get exhausted from playing the games haha. I guess you'll be fit if you decide to be a "Project Natal" (still going by its codename) player.
Also: New Halo Reach game, Metal Gear Solid on Xbox, Facebook-Twitter-Last.fm free on live, live hd tv (may need to cancel my cable tv subscription) while allowing you to connect live with other xbox users and share the viewing experience, the amount of content they are adding to xbox live is mind blowing..
The camera is evil!
http://media.coveritlive.com/media/image/200906/phpeUJv2Y_DSC7439.JPGShe's playing a game called "Milo" which is a game world with an interactive AI which actually freaks me out a bit. The camera can scan 3 dimensional objects in the real world and put it into the game. Obviously there is a physics limit but.. sob.
Lots of other things but those are what totally blew me away.