I just bought one with the Kinetic fitness game. It projects yourself on the TV and it "knows" when you hit the correct/incorrect things on the screen. I'm still figuring it out. Make sure that you have enough space to use it. I am about 5 feet back from the TV but it still constantly tells me to back up, so I need to figure a different way to place the camera or move it back. It can pick up *any* other movements in the room, the dog or DH is always screwing up my score.
I have one DDR game as well (my version isn't compatible with eyetoy). I don't think I would want the added confusion of dealing with the eyetoy along with the dance pad. If you doing it for fitness reasons, Kinetic is a pretty cool game. You can pick a personal trainer and go through a 12 week training regimen.