It's an xbox.
The whole experience still screams "I'm a hardcore game device". Hell, it's called an "XBOX" for crying out loud. That doesn't sound warm and fuzzy. When you unbox it, you still need to use the xbox controller with it's intimidating array of input buttons, pads, triggers, and sticks. Most people are going to be scared and intimidated by that.
If you power it up, you're going to be confused by xbox live. You're going to be confused by how many accounts you need to create. You're going to be confused by the number of options.
You're going to be intimidated by ads for Call Of Duty.
You're going to be confused what is an arcade game and what is a demo.
In short, as much polish there is on the Kinect, it can't overcome the fact that it's a bolt-on product for an Xbox. If it was a brand-new, $199 device it would fly off the shelves. What it needs is a 60 second demo: when you have a friend over, you need to be able to turn on the device and be playing Kinect 60 seconds later without ever seeing the xbox controller.