For more accuracy we finally decided to implement VB based tilt mouse. Tilt based properties of accelerometer are really accurate, slow varying & proportional to static, large in magnitudes.
Figure shows variation in data in 1-complete rotation along x-y plane. Relative peak magnitude is +/- 200 counts. Mapping this data onto computer screen for movement of cursor was quite simple in VB. It gave enough accuracy. Different gesture recognitions were also possible with template matching. But we restricted ourselves to make it wireless on CYWM 6935(2.4 GHz- 2.4803 GHz) USB Module with range of 50 meters using Direct Sequence Spread Spectrum technique.
This tilt information was then mapped on to computer screen in Visual Basic to move cursor in X or Y direction. Averaging 4 samples in microcontroller gives stable results with around 100 samples per second scanning rate.