Now, granted, this gimmick doesn't just use Kinect. It uses a fancy clear display and Kinect to achieve the effect. But what an effect it is.

This clip from Microsoft's research wing shows a user gently fondling and cupping some balls in a 3D space. Even though he's looking through a 2D screen and his hands aren't really touching anything outside of a coffee mug and a piece of paper.

Amazing stuff. And, depending on your level of maturity, potentially NSFW as well (well, at least the first ten seconds).