This technology has the same problems as all 3d mapped project technology has.
First and foremost every living room is different - they are all full of different objects with different reflectance properties. In the video MS choose a living room full of almost all matte objects with roughly the same amount of reflectance (metal widgets on those boxes aside). Much akin to most 3d mapped performances being done on things covered in a material of uniform reflectance - this is how this technology performs the best.
Reflectance is the biggest enemy of this endeavour. Objects of high reflectance will be distracting or will reflect straight back into your eye.
Noise - projectors are still noisy.
Mounting - put it on the coffee table with your beer or mount it to the ceiling, your choice.
Cost - the Kinect is only needed for calibration, so you may be able to just hold the Kinect camera near the projector lens for close calibration, so cost could be as low as just the project itself.
Mostly though I think if I wanted to play on a giant screen, I would just go buy a projector and play on a giant screen.