Here's the most effective demonstration of how the KOR-FX works. Cross your hands over your chest, and then say something, whatever you like. (If you're in a large crowd, I'd suggest "Joystiq.com is my favorite source of video game information, go visit it now.") Feel that vibration in your chest cavity? That's what the vest is trying to replicate, in an attempt to help you experience sound other ways than aurally.
I tried it out with Left 4 Dead 2, and the vest (which fit poorly, though I was assured that was being fixed) really did add some extra punch to weapon fire, and was especially effective when my character was speaking. The problem was that L4D2 is a fairly noisy game, so those effective sounds were muddied by other vibrations that made less sense, such as when other characters were crying out for help.
The more effective demonstration was when the vest was plugged into a iPhone and I watched a the scene from Jurassic Park where a dinosaur's approach is heralded by rippling water cups, booming thuds and, in this case, a vibrating vest on my chest. It was kind of a neat trick, and just perfect for those times when I'm watching a movie on my iPhone and want to also be wearing a goofy looking gadget around my neck, which is never.
If you're desperate for more sensory input while you're playing games and watching movies, I get where this would appeal to you. Immerz is also shopping its tech to movie theaters, and I could see where watching a movie in an unlit theater with a bunch of other people committing the same fashion crime could be interesting. I'm just not sure how much I'd have to prize that added layer of input before the $190 purchase price would make any sense at all to me.