In Gamasutra, there has been a good article about Heads-Up Display last week. It adresses the topic of HUD usability. As they say, the developer's challenge is the following: how do you convey necessary information to the player without utilizing a traditional HUD?.

A HUD is simply a collection of persistent onscreen elements whose purpose is to indicate player status. HUD elements can be used to show, among many other things, how much health the player has, in which direction the player is heading, or where the player ranks in a race. (...) what would make console developers suddenly rethink the necessity of such a seemingly essential and time-honored technique as the HUD? Here are three compelling reasons. (...) millions of high-definition televisions have an Achilles heel that can hinder developers as well: burn-in. (...) it is caused by persistent onscreen elements that, over time, create a ghost image on the screen even after they are no longer shown. (...) yes traditional HUDs can pose a risk to many who play console games for extended periods of time on their HDTVs. (...) Just as a filmmaker doesn't want a viewer to stop and think, “This is only a movie,” a game developer should strive to avoid moments that cause a gamer to think, “This is just a game.” (...) nothing screams “this is just a game” louder than an old-fashioned HUD. It is not a part of the game world; it is an artificial overlay. (...) [casual] Gamers looking for a “pick up and play” experience are not inclined to spend time figuring out what all those bars and gauges are for.

The article then investigate "how to go HUD-less":

remove useless information, decide “Is this information essential to the game experience?”
use audio cues to either reinforce a visual cue or offer a unique message that is not easily shown visually.
if a HUD is really need, only show an element when the player status changes.
another solution is to allow the player to control the appearance of the HUD.
remove static elements from the HUD