We've done some experiments over here at Kapor Enterprises using 3D cameras to control virtual worlds like Second Life.
Mitch Kapor and Philippe Bossut designed a prototypical interface that demonstrates the possibilities for operating Second Life "hands free" without a mouse or keyboard. To make this work, they modified the open source Second Life client to support the camera as an input device.
This new prototype was made possible through the use of a 3D Camera designed by 3DV Systems. The camera is very similar to a webcam, but also captures the depth of all the objects in its view. Our prototype is still very experimental: we haven't made the code or executable available and the cameras aren't available yet anyway.
For the moment, our objective is to explore the possibilities for these new types of devices. We believe that these cameras will eventually make interacting with Virtual Worlds as comfortable as using a webcam. This will ultimately broaden the appeal of Virtual Worlds by allowing new ways of online expression. It may also attract people who find the current gaming interface too hard to handle.