To give a more serious answer . . . this technology will open up new game features, even some new "games", and will certainly attract more users to these boxes. Just like the Wii did.
When the Wii was first introduced, gamers laughed at the low-tech graphics compared to PS? and XBox. They laughed and said the game would never make it. Result? Huge Seller. Why?
Parents who don't want their kids glazed over for hours SITTING in front of a screen had no problem once they saw their kids working up a sweat playing (eg) Wii Sports. Adults who never play these games because they can't compete reflex-wise with young twitchers thoroughly enjoyed many of the Wii's early offerings. Wiis started to appear at "cocktail parties", and lots of folks jumped right in.
From there some discovered (eg) Guitar Hero, and loved it. Sure it can be played on any box, but they play it on the Wii. SuperMario now, too. Get it?
The new tech would (eg) detect body position, and combined with the Wii controller would make Wii sports far more accurate and demanding. One could envision a 3D soccer or hockey game where you are the goalie. And so on.
None of the old controllers will completely disappear, for all the reasons you already know. I don't want to point my controller at the screen for 4 hours - hell, I don't want to hold my hand up that long. But maybe reaching for your weapons belt or holster to arm your next weapon *is* more realistic. In any case, new games will appear, and they will truly represent a new generation.
This isn't FIOS, but it is "big"