A quick note on something super interesting that I came across a few days ago.
IllumiRoom uses Kinect and their projector to translate any game into an immersive environment with projected effects.
See the full 720p video here (5 minutes 29 seconds):
Its pretty awesome to see all the effects one can input as a developer and make this a truly immersive experience. This may be an excellent intermediate next step for console gaming before devices like the Oculus Rift for 3D gaming become more popular.
A few screenshots are given below: