First, the USB connection limits the real-time capture abilities meaning there’s no way around at least a small input lag. I spoke with Senior Developer, Anton Mikhailov, at the Sony Move Meet-up event who said that they have tested out the PlayStation Eye on PC LCD monitors with about 22 millisecond lag time, which is comparable to the 16 milliseconds of lag you experience while using a Dualshock 3 Controller.
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The next thing that would cause lag is the player’s TV. Due to variances in television technology some users may inevitably experience more lag than others. While most modern LCD, Plasma, and LED sets have this problem licked, there are some that will still suffer unnecessarily. Luckily, there’s a calibration tool at your disposal that will alleviate some of this pain through software compensation.
Finally the last thing that would cause lag is the developer. Yes the developer. The sensitivity of the controller can be turned up or down on the software side of things. Richard Marks, Senior Producer on PlayStation Move, showed me an example where the sensitivity of the device was turned down therefore there was a noticeable lag in my movements t. Then he cranked it back up to normal and everything became one-to-one again.