I've only used it a couple of times myself, the first was a disaster, it barely worked, the next time, under better lighting conditions it was definitely better, but quite glitchy and jumpy, plus the head movements were just a bit too laggy to be useful. It helped me lose my kind of spacial awareness in the game simply because it can move when you don't expect it, so for a split moment you think the car is moving off line... so yeah, can be quite confusing. It's a shame it's not more responsive and accurate as I would love to use it, bought a PS Eye (2nd hand) just for this feature in GT5.
It's annoying it is not enabled in the main career mode of the game, which feels a bit silly. I would love it to work better but someone from PD needs to explain how the best way to set it up is, what kind of lighting works best, and what to set the settings to to enable it to work how you want it to. They could even make a head tracking baseball cap or something with markers the PS Eye can see much clearer... just a thought, since better implementations of head tracking I know of tend to use markers actually on the person, rather than using an image and working out where the face is...