The immediate thing that occurs to me about this (and to a certain amount, Milo) is the possibility of a game generating feedback and moderating your gaming experience based on feedback it gathers directly from you.
The best example of this is the Director from Left 4 Dead. Imagine how much better a job it might be able to do if it could monitor your pulse, or analyse your facial expression to get an idea of your current emotional state.
The problem, of course, is that then you could feed the AI false information and manipulate the state of the game by, say turning the camera to face the wall. or smilng gleefully as a zombie rips your limbs off. And I have visions of your Wii deciding to call medical assistance if it can't detect your pulse, even though you're fine and just didn't want to wear the stupid thing on your finger.
Another example where player feedback might be useful is during the "talking heads" scenes in Oblivion. Imagine if you could change the "tone" of your questioning based on facial feedback?