Kinect will never be used to perform sexual acts if Microsoft has anything to say about it.
Kinect-compatible porn games may crash and burn before they ever take off. If the idea of using a virtual Kinect hand to cup some boobs was exciting to you, I'm sorry to say that Microsoft has said that it'll never allow Kinect to be used for interactive porn because it wasn't designed for that.
Adult game maker ThriXXX recently unveiled the demo for a Kinect porn game interface that it hopes to include in future PC games. The demo features the user controlling a very creepy hand that can get to second base, and further, in an instant.
Microsoft responded to ThriXXX's demo and other Kinect porn games in a statement that reads: "This isn't the first example of a technology being used in ways not intended by its manufacturer, and it won't be the last. Microsoft did not authorize or license its technology for this use. Xbox is a family friendly games and entertainment console and does not allow Adults Only (AO) content to be certified for use on its platform, and would not condone this type of game for Kinect."
So we probably won't see official sex games released on the Xbox 360, but that doesn't appear to mean that a PC game can't be released with Kinect compatibility. However, there may be some legal issues with that as well, and Microsoft is likely to use everything at its disposal to make sure Kinect isn't associated with touching private parts. Even if ThriXXX is within its rights to allow hands-free porn control through Kinect, Microsoft probably has a much stronger legal team and more funds at its disposal.