After watching a lot of the tech demos of VR projects, the moment that I remember being impressed with the most was of a guy manipulating blocks with his hands in VR using a Razer Hydra.

Having a full digital model like what is done in Crysis or Mirrors edge will be impressive but I think having your characters arm animations be translated from your own will add a whole new level of immersion if the latency is small enough for it to not feel clunky.

Being able to open doors, manipulate objects for puzzles, use hand gestures for spells, point a flashlight, aim/swing weapons, block with shields, will all be amazing experiences.

Are there any products out there that can bring this to the table now? I've seen some clever stuff with the Kinect but it seems to have pretty high latency. The other options all seem to be either limited in range or are not accurate enough enough to match up your hands to a mid-air coordinate consistently enough to not break immersion.