Enrico Costanza is doing some interesting stuff with tangible interfaces and even intimate interfaces.
Check out this tangible virtual drum machine interface:
Here’s how it works:
A standard personal computer observes the blocks through a low cost web-cam and uses the images to calculate the position of blocks. The information about the position and orientation of each block is used to control a digital audio synthesis process.
The system was designed to be extremely low cost (it only requires a consumer-grade PC with a sound card and a web-cam, inexpensive wooden bricks tagged with the markers and a printed piece of paper covering the interactive surface), robust and easy to set up, which makes it ideal for domestic and school environments.