I can understand why the microphone array is so much bigger than the lens and that it's all on a pivot so it can be directed at the action but does it really have to look like an old Logitech webcam with an elextric razor head stuck on the top?

Maybe in the style of a certain mouse manufacturer this could be called the Razer Head? Just a thought...

still no Guitar Hero..

Having worked with the old eyetoy at university I would advise moderate illumination since the old one was very prone to 'fade to white' effects with no more light than was provided by the strip lights on in a lab.

The room shouldn't be too dark but if it glitches try turning off a light or two. Assuming it's based on the old one (which used an ov519 chipset as I recall)