Hey Orbital, I take it the jittery and spinning is meant to be part of the 3D and physical experience. I would assume they have a setting to adjust that though. If not, they seem to love feedback.
Grimm, the point is to give a more "intuitive" experience and more gestures oriented. I could see it be really useful on tablet pcs and smartboard type devices. Less need for the keyboard interaction and such. Additionally from what I can research, it'll support multitouch input. That will be a revolution in computing equivelant to the introduction of the mouse.
In multiuser environments on the same computer and input device (think large smartboards and the like), this type of UI could be useful.