Thinking about how E3 will play out, I've got a hunch. When you start digging into Natal, or whatever it's soon to be called, the major problem with the vaunted controller-less controller is just that. No buttons.
My prediction is that at E3, Microsoft will introduce a similar buttoned one-handed controller, or a set of controllers to remedy the issue. I'm not sure if it will include any motion tracking the way Sony's Move wand does, but I can't see Natal going very far without buttons. However, instead of assuming Microsoft is filled with fools and it is written by the gods that Microsoft can never do anything right, I'm going with Microsoft biting the inappropriate appropriations bullet and stomaching whatever sniping the fanboys have for the theft.
The PlayStation brand CEO, Jim Ryan, said that the Bungie deal gives them way more value than the Activision acquisition.