Virtual Reality- while I wouldn't go so far as to claim it's a pipe dream, as we're making strides even today- is a long way off yet. However, this isn't to say we can't dabble with immersion. There are other senses to appeal to, touch, smell... Perhaps nintendo could pander to that if they want to lead the nose of the market around?
Imagine, you pick up a hot object in game and your control warms up a bit. You Enter a lush evergreen forest, and something on the console emits a bit of a piney scent. These are things that would be small, subliminal, but interesting, and they'd help to draw you in. That seems silly, superfluous, you might say, but you could argue the same thing of three dimensional televisions, the kinect, etc, and those things exist today. It's not about whether or not something seems necessary on its own, its about the potential for the way it's used. I think that if a developer was clever enough there are some interesting things that could come about from messing with the player's perception.
Pot: the videogame.