To everyone who says Microsoft will almost certainly improve the performance, ask yourself this, why would they open themselves up to all the criticism by showing a demo that they know is below the performance they will get out of the device?
Its more likely that someone said "Natal is just about there, time to show it off", and not "Natal is barely working right now, but won't the public still be wowed at what we've been doing with our millions of dollars?".