Earlier this year Greg Wilson in Gamasutra wrote "Off With Their HUDs!: Rethinking the Heads-Up Display in Console Game Design." He suggested that the game industry is evolving away from the Heads-Up-Display (HUD) and moving towards incorporating information directly into the game environment...
One claim is that "many important HUD elements can be seamlessly integrated into the game world to enhance player immersion..."
The examples in this article are console games - especially first-person shooter and racing games. These genres seem most prone to emphasize formulaic interfaces featuring HUD designs that contain components that (in Wilson's words) " are there not out of necessity, but out of convention..." (ref also discussion on the Guardian Unlimited). I suspect, however, a case could be made that user-interface convention and design legacy ripple through all categories of virtual world interfaces.
One take on the trend of embedding more information within the world was documented by Alice a long time ago (re: Peter Molyneux's The Movies, emphasis added):
Look at this game: no HUD... Left button is pickup, right button is interrogate. That’s it... We use AI to try to guess what you’re doing by where your cursor is. As you rollover the actors, the information pops up contextually.. pick up an actor, and this ‘stream of consciousness’ points out the most sensible things to do... Let the player experiment.
A few thoughts here. Perhaps moving the user interface into the environment will help overcome the feeling of a cockpit. But too, is there a small irony as virtual worlds mimic pervasive-computing (emphasizing decentralized interfaces) with a recursive twist: to interact with this world requires an interface, and to interface with the world requires interaction?
One benefit of decentralizing control into the virtual world may be that it can help counter amongst some casual players the problem Joel Spolsky once described as learned helplessness (emphasis added):
...User Interface (UI) is important because it affects the feelings, the emotions, and the mood of your users. If the UI is wrong and the user feels like they can't control your software, they literally won't be happy and they'll blame it on your software...
Will closely locating the actions and choices available to the players with the objects in the virtual world help a player to feel more in control and more immersed, or will it instead bring a new dimension to hunt and peck?