I've actually owned one for quite some time and have a three year old in the house. After she understood how she was controlling the game, she was able to play various games. Also, they do have some excellent family titles--the Sesame Street "Once Upon a Monster" and Disneyland Adventures titles both got excellent reviews and are great games where parents and kids can play together.
As for adult titles, there a few "adult" level games--just off the top of my head, Dance Central 2 (and borrow one from a friend and pay to rip/import all of the songs from 1 into 2 to double your setlist), the Gunstringer, and Child of Eden. And workout games like Your Shape Fitness Evolved, which have received good reviews, would be "adult", one would think.
Eventually, there's going to be a Panzer Dragoon-ripoff game (not a bad thing) from the creator of the series coming out soon, as well as a new Steel Battalion game, and multiple titles (Forza 4, Halo Anniversary, Mass Effect 3, Tom Clancy's Ghost Recon) have some sort of functionality, from the microphone (ME3) to headtracking to change the first-person view (Forza 4--works really well and is cool). Plus, remember that they just updated their dashboard on the system to include full Kinect integration, including voice search.
It's honestly more than a novelty at this point, considering how many have been sold and the increased Kinect support in the dev community.
Ultimately, it's not perfect, but it's fun and will get you and your four year old moving, which is the important thing. It's a good buy, especially if you land one of the combo deals that Target, Best Buy, or Amazon have out there right now.
Oh, and if you don't have much space to play in, then you may want to look at one of the 'glasses' accessories that reduce the amount of space necessary for the Kinect by making it, in effect, 'nearsighted'. The "Zoom" is such an accessory and will set you back a sawbuck or two, though people have had rather mixed results.
Amazon has the Kinect with Kinect Adventures (good game), the GunStringer (very fun, quirky shooter), and Fruit Ninja for the Kinect for
$99.99.