Things most certainly WILL be broken; coffee tables, chairs, couches, vases, cats, babies.. basically anything in the immediate area. “Game rooms” will look like padded cells at your local mental hospital.

Another interesting thing about this is how obese/inactive people will be able to play fighting games (virtua fighter, street fighter, etc). Microsoft is essentially going to force people to get in shape to play their games. I would imagine those people are a hefty part of their market share (pun intended).
I would assume that they’ll continue to allow people to use wireless controllers (if not, puzzle games with timers are going to disappear [can you imagine trying to move/twist/turn/swap objects in a puzzle game like Tetris?]).

It’s interesting to see how game systems are evolving, but ultimately I don’t see the ‘typical’ controller being removed anytime soon.