They couldn't simply turn the camera toward a wall or unplug it? If someone feels uncomfortable having the camera on the Kinect I can't imagine they're the kind of person who would buy it in the first place for said reason. Who even thought up this silly thing?
The idea (from the press release) is to allow voice commands for things like the Zune media center and such without requiring you to be on camera the whole time.
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Again - a solution looking for a problem.