Kinect is a motion sensing technology from Microsoft which is currently being used in the Xbox 360. It has added a whole new dimension to games and has garnered a huge fan following. However Microsoft's other gaming platform, Windows Phone 7 currently doesn't offer any such technology. That is understandable though considering how Kintect works. 3 cameras, one of which is infrared capable to make night time gaming possible. That kind of space just isn't available on a smartphone, and an infrared camera alone is far too difficult a task to incorporate in a handheld device.
However Microsoft isn't giving up. With Windows Phone 8, aka Apollo looking more and more like a real thing, though it hasn't been officially announced, Microsoft doesn't have anything to loose. Xbox integration is the biggest competitive advantage Microsoft has on their mobile OS which is why with Windows Phone 8 they're looking for ways to integrate Kinect into the OS.
Even if Microsoft is able to somehow put anything similar to Kinect into a smartphone, it will be a huge boost to mobile gaming. We can only imagine what the competitors will bring to the table. Apple with its iPhone and Sony with its PS3 integration.