In Gingerbread, Google is planning to add several new sensor fusion APIs including quaternion, rotation matrix, linear acceleration and gravity. It sounds confusing, but developers will finally be able to leverage the benfits of the gyroscope working together with the accelerometer and magnetometer.
The uses of sensor fusion technology are nearly endless but expect it to appear in all types of applications including user interface, augmented reality, gaming, image stabilization, and navigation.
For an idea of what to expect, check out the Google Tech Talk by David Sachs of InvenSense where he shows off several demos. The application examples start around the 3:30 mark.
What type of motion controls would you like to see in Android? I think the lock-screen demo was pretty awesome, but I bet you all can come up with some cooler ideas.
p.s. Yes, the Nexus S has one of these fancy gyros.