I worked on it too. You're right about the head tracking - it did work very well. They had some great UX ideas centered around it too. It's unfortunate it didn't pan out for those UX features alone.
Which were the great UX ideas? I think I missed them... The fact that you had to move your head or phone just to see the time was bad. The 'peek' gesture which required moving your head to the side and looking sidelong at the phone to open a side navigation menu was equally lame.
To be self critical, I think there was a lot of, "We've got this cool hammer, let's make everything a nail" sort of thing going on where the perspective stuff was grafted onto a lot of areas better left alone. That said, the tilt scrolling on web pages was actually very nice to use (remember it was based on the angle to your eyes, not the physical phone angle, so you could use it lying down). And like I said, applications where it was helpful to glance around a 3D object, was quite compelling. But yeah, there were too many areas where the effect was used where it probably didn't need to be.
The feature I miss/wish for the most was looking at the phone sitting on your desk and having the screen turn on. "Wonder if I have any notifications...Nope"
