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Avatar Kinect has been announced in January at CES and not long ago we've found out the launch date. In a recent press release, Microsoft says that Avatar Kinect
rolls out later this spring
However there are two weeks left out of this spring, and the press release does not mention again the announced release date - 27th May - for Avatar Kinect. Hopefully, it won't get postponed.

From the lab to the living room

The press release also contains some details on the work involved to create Avatar Kinect.
The work that we did was taking something that was essentially a demo and turning it into a product. It’s a huge amount of work. The work included developing algorithms for facial expressions and making sure the computer vision could work with Kinect.
- Eric Lang, a general manager for Microsoft Startup Business Group

Interesting enough, Eric Lang added:
This is just the beginning.
Microsoft does like to say that a lot so they probably have something planned and I sure hope they will deliver on their promises.

Pete Thompson, general manager of Xbox LIVE, talks about this experience working on this project:
It was personally very gratifying to see the teams come together and find creative solutions. The end result is a highly-curated consumer service that is very compelling, but also has tremendous headroom for future innovation from Microsoft and its partners.
At this moment we are still expecting Avatar Kinect on 27th, unless "later this spring" means during the summer.
To refresh your memory on Avatar Kinect you should check out the trailer below.

Avatar Kinect Trailer

Source: Microsoft

From 123 Kinect Article: Avatar Kinect rolls out later this spring