I love my Kinect. I've never experienced lag with it at all. In fact, the spring or fall update for the 360 is going to add more refined control BECAUSE the 360 is handling it so well. If the one at Best Buy had lag, it's probably because someone licked it, kicked it, or who knows what. Demo stuff in big box stores are notoriously poor representations of actual use in the home.
I'm planning on picking up Kinectimals for my youngest son, who thinks it's awesome. The YourShape fitness game is great, and doesn't require you to look like a DARPA experiment like a lot of the Wii fitness games do, or use some chinsy board.
Hell, even Ubisoft's uPlay interface has some cool Kinect features.
No, there aren't any AAA titles for it yet, but I give it a year before there are. The thing outsold the Move - which doesn't say anything about the quality, but does give developers a reason to design games for it. Just give it another year