Kinect's patent application said the device could recognize American Sign Language. Microsoft then backed off the claim, at least for the initial generation of the device, saying that sort of application would be supported in later models. Then people started developing open-source Kinect drivers and doing all sorts of cool things with them. And lo and behold, the commercially available Kinect recognizes sign language.

This is a proof of concept by some French researchers showing Kinect recognizing gestures for "Hello" and "Sorry." It's not clear how detailed Kinect can get in reading gestures - I'm guessing ones differentiated by finger positions or numbers held up might be a little tough to read.

It's still a solid demonstration of the device's capabilities, and if you're wondering about its practical application - a person who cannot speak can use some other input already available - it's possible this could be used in an educational program teaching sign language, to the hearing and non-hearing alike.

Turns Out Kinect Can Read Sign Language

Kinect Used to Translate Sign Language [Ubergizmo]