The early Oculus DevKit certainly has some issues: no translational tracking gives me strong motion sickness, high persistence display makes the scene blur as I move my head, low resolution produces screen door effect. Regardless of these downsides, after 10-15 seconds of use I accepted that VR will be the "next big thing."
Large hamster ball on rollers. Infinite space to walk or run. Also, you don't need to track their motion or feet, you just feed in the data from the rollers, and you know how fast their character is walking or running, and in what direction.
A rar of the game is here, req kinect sdk installation + oculus rift. http://motionos.com/sw2.rar
Occulus Rift is going to be awesome for all these games where you are supposed to be sitting in a cockpit. For FPS, not so much (unless you have a giant hamster ball and tons of sensors as someone else mentioned).
I had a friend lay flat on the floor for half an hour after a level of Quake 2. Brings back fond memories of my first days playing Wolfenstein 3D and experiencing motion sickness..