The tech demo shown live on stage during the Sony press conference showed off several different uses for the device including writing, painting, fighting with sword & shield, throwing stars and guns (use of two wands here), directing a flash light, building a tower with blocks and hitting a tennis ball.
This new technology unfortunately will not be coming to the Playstation 3 until Spring 2010.
Microsoft revealed their Project Natal which is a full body motion control device that plugs into an existing or future Xbox 360 device. It incorporates facial recognition, full body motion controls and voice recognition.
This device uses no sensor device on your body anywhere but will allow you to use the device in various ways like scanning real life objects for in-game use, clothes modeling, game controlling and even turning off your console using voice commands.
At the Microsoft press conference, they showed off a few tech demos for Project Natal live like a full body control brick breaker game and a dancing avatar. Those these demos looks alright they didn't really show off some of the better ideas posed in the trailer they featured at the conference as well.
In the long run, I think Sony has the better motion control device here as they have proven live that the motion control wand has the smoothness and most accurate controls out of all the game companies.
But in reality, real gamers tend to want to sit on their butts and game, so all these motion control devices won't decide the fate of the console wars anyway. Tell me when someone makes a holodeck and then I'll claim them the new winner.