From kotaku:

At the 2009 E3 gaming expo in Los Angeles, Nintendo revealed the Wii Vitality Sensor for the first time. The peripheral was M.I.A. at the following E3. And at a recent investors meeting, Nintendo president Satoru Iwata didn't explicitly provide an update.

During a Q&A session, Iwata was asked if Nintendo is still making big titles for the Wii and noted that there hasn't been any recent news about the Wii Vitality Sensor. Iwata replied that Nintendo is working on big Wii titles, but was mum on the Wii Vitality Sensor specifics.

"Of course, we want to release original titles, but in order to release new games, we must continue developing them," the Nintendo president said. Iwata went on to point out the time is necessary to ensure a game's quality. The hurdles for original games, Iwata noted, are quite high. Nintendo must thread a needle between "interesting" and "easy to understand".

While Iwata did not specifically address the Wii Vitality Sensor, Nintendo, it seems, is continuing to move forward with its development. Wii Relax was trademarked in the US and Europe, while a patent application hints at games for the Vitality Sensor.

According to Nintendo, the peripheral will sense a user's pulse and "a number of other signals being transmitted by their bodies, and will then provide information to the users about the body's inner world."

Really, how many games (Wii Fit is software) could they think of for this thing? Maybe some horror games, but given the weakness of needing a peripheral, I imagine most third parties wouldn't be interested. Leaving Big N to do it themselves.