I think the idea of VR is beginning to shift: head-mounted displays are clunky, a much more immersive solution is to project the virtual world on a large curved screen or a wall, and then use array microphones, and a set of cameras for tracking user motion.

I worked on a project like this a while ago: https://www.youtube.com/watch?v=lVVKNTP0lfo

There are a few places where this research is going on, USC's ICT also has a really nifty setup, a lot like HoloDeck v0.0001 from Star Trek: https://www.youtube.com/watch?v=tcTswP0sF9w