The demo from Microsoft shows interaction between the Kinect game Kinectimals and Windows Phone, but there will most certainly be more interaction between all types of games, not just kid's games. In the demo, we see the Windows Phone connecting to the XBox and transferring the in-game cat from the 360 to the phone, where it could be manipulated in a sort of augmented reality fashion. It's pretty interesting to see it in action, although some of the steps seem a bit clunky. Rather than using on screen menus, or even a Microsoft Tag, it uses open-source QR codes to access the data on the phone, but transferring back to the 360 seems pretty nice.
It'll be nice to see what other good stuff Microsoft has planned for gaming on WP7.