Based on the resume of one Shawn Woods, Microsoft is currently working on "a core AAA shooter experience using Kinect." Woods serves as art director for Microsoft Game Studios Vancouver, which appears to be a brand new branch focused on making "core" titles. The studio's "mission" is to "push the limits of proven and unexplored game development and show the world what's possible on Microsoft's game consoles."
It's worth pointing out that the MGS Vancouver website makes no mention of a Kinect focus, nor do the job listings on its front page.
Rumors regarding a core shooter for the Kinect have been circulating for quite some time, ranging from a possible "on-rails" Gears of War title to Halo. The latter is more likely in this case, given that MGS Vancouver is an internal Microsoft studio. Then again, it's possible that the studio is working on something entirely different.
Whatever the studio is cooking up, here's hoping we hear more by the time E3 rolls around.