We seem to be on the edge of the "uncanny valley". The uncanny valley is the phenomenon that occurs when robots or virtual human come very close to appearing human but are still just a little bit off, producing an response in humans that ranges from eerie unease to repulsion.
From the Wikipedia entry for: Uncanny valley
Mori's hypothesis states that as a robot is made more humanlike in its appearance and motion, the emotional response from a human being to the robot will become increasingly positive and empathic, until a point is reached beyond which the response quickly becomes that of strong repulsion. However, as the appearance and motion continue to become less distinguishable from a human being, the emotional response becomes positive once more and approaches human-to-human empathy levels.
This area of repulsive response aroused by a robot with appearance and motion between a "barely human" and "fully human" entity is called the uncanny valley. The name captures the idea that a robot which is "almost human" will seem overly "strange" to a human being and thus will fail to evoke the empathetic response required for productive human-robot interaction.
An article on the Slate magazine of the phenomenon of the uncanny valley in movies and video games: The Undead Zone: Why realistic graphics make humans look creepy.
The problem, Mori realized, is in the nature of how we identify with robots. When an android, such as R2-D2 or C-3PO, barely looks human, we cut it a lot of slack. It seems cute. We don't care that it's only 50 percent humanlike. But when a robot becomes 99 percent lifelike—so close that it's almost real—we focus on the missing 1 percent. We notice the slightly slack skin, the absence of a truly human glitter in the eyes. The once-cute robot now looks like an animated corpse. Our warm feelings, which had been rising the more vivid the robot became, abruptly plunge downward. Mori called this plunge "the Uncanny Valley," the paradoxical point at which a simulation of life becomes so good it's bad.
As video games have developed increasingly realistic graphics, they have begun to suffer more and more from this same conundrum. Games have unexpectedly fallen into the Uncanny Valley.
Most by now have heard of Real Dolls, the life like sex dolls that cost thousands of dollars. What you may not have seen is the fascinating, albeit bizarre, documentary called Guys and Dolls about a group of men and their relationships with these dolls.