What I'm saying is that you're already trusting all of the other technology in your life to protect your privacy. If you use a feature, you're trusting the company to protect your data. If you turn it off, you're trusting multiple companies when they tell you the feature is REALLY off. And even when it is REALLY off, there are plenty of other features that you can't turn off. The cell phone company can triangulate your position within a couple of meters no matter what you do. You're trusting them with your data, you're trusting the legal system with your data, etc. And that's just one example. The fact is that people are happily trusting hundreds of companies with virtually everything there is to know about them, yet they're freaking out about the Kinect because it's "creepy." People who don't update Java or run antivirus systems are afraid of Microsoft seeing them naked.
Anyway, I'm not trying to say that privacy issues aren't possible with Kinect, or that it's a totally risk-free proposition. What I'm getting at is that the vast majority of modern citizens --yourself included-- have shared enormous amounts of private data, and, compared to that, Kinect is a relatively minor offender. Microsoft is an old, established company with a lot to lose when it comes to privacy. They're not going to have people watching your house, they're going to have algorithms processing your data. Certainly the hardware has the potential to watch you, but so does most of other hardware in the average household. For people who already trust the others, this should not be a huge deal.
Concerns are fine, and I understand that there are people who want to minimize exposure (however futile I believe their efforts to be). The outrage, however, is misplaced. In my estimation, Kinect is among the least likely of devices to violate a user's privacy.