I never watched my parents have sex when I was little, yet I figured out how later in life. Genetics wins this one.
In all honesty though, that's a really neat genetic theory. It's strange to think of our bodies as vehicles for genes.
It's really not all that strange. The earliest prokaryotic cells were not much more than replicating molecules enclosed in a membrane. In fact, there really is not a clear line between life and none-life. Many biologists don't consider viruses to be "life". Watch this TED talk on proto-cells.
http://www.ted.com/talks/martin_hanczyc_the_line_between_life_and_not_life.html