Here's my video. (Note: it's compressed using 7-Zip with a compression ratio of 132.5 -- use 7-Zip!) I basically created a couple cylinders, deformed the top one, picked some materials, and animated the top one waving around in 6 degrees of freedom over the bottom one. The idea is that the user's motions in all these degrees of freedom would be transmitted to the computer, which can e.g. transform an on-screen 3d model, creating a very natural user interface for 3d interaction. The mouse is good for 2d interaction but many of the frustrations associated with computer modelling (IMHO) can be solved with this type of device.
Please note that I didn't come up with this idea -- I learned of it by trying one out at SIGGRAPH '06 -- but I'd like to make it using "fab" technology, and for cheap.