Sure you can. Jumping back and forth between controller and body navigation can break up your playtime, but if you're bent on using the controller, you'll still have full game functionality. Press any button on the controller to navigate menus using your controller. Press "Start" on the controller to exit Controller Mode and navigate using your body. Make sure you turn off controller mode each time your song is loading, otherwise Kinect won't register your moves!
Don't forget that in Dance Central 2, you also have the option of using voice commands!