Yeah . . . I read that. I don't think it'll ever come out for the 360, frankly. But if it does, I don't think it'll remain on the shelves very long. Peripherals like that virtually always fail. The only way it even has a chance, is to pack it in with a really amazing game (a la Guitar Hero/Rock Band). But that little controller is going to tack a good $40-50 to the cost of a game, so it's REALLY got to be a damned good game for someone to pay $70-100 for it. The fact that most people probably won't drop $70-100 for the game, means that market penetration will be too low for other developers to make games that take advantage of it. It won't be cost effective. Why spend resources making a motion-controlled game for the 50k-100k people who bought the Xbox 360 game/motion controller, when you can put even less resources into making the same game for the 10 million Wii owners who have a motion controller?
I believe that Microsoft is developing a controller like this, but I half-suspect it'll never see the light of day until the Xbox 720 (or whatever) comes out. If it does see the light of day, I'll put money on its being a dismal failure in the marketplace.