I got it as a Xmas gift last year. Some games allow you to impose your face onto your character in the game. Only 2 games I know that supports this that I have are Tiger Woods PGA Tour '08 & Rainbow Six Vegas' multi player. Not sure if RSV2 has the feature as well.
On XBLA, UNO allows you to see other's w/camers, but be careful, I've heard of some sicko's out there on that game.
Besides doing video chat with friends & relaltives, not sure what else you can do with it.
I guess a few games that require the camera are coming this fall to XBLA from what I saw on E3 the other day.
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