Have a look at this video of Sony's EyePet, (skip to about 1:00 to see it in action). It's a kind of virtual pet using the Playstation camera, but the level of interaction is amazing. You can even draw toys for it, which appear in the game.
Eurogamer's 'Hands on' article has more info.
The company behind the animation for the recent Grand Theft Auto game have developed a new system which has overleapt a long-standing barrier known as 'uncanny valley' - refering to the perception that animation looks less realistic as it approaches human likeness.
Things move fast in the world of flash - so just in case you've been less than attentive, here's a few cool things from the recent to the nearly now...
SourceBinder - "...a node-based visual framework for easy prototyping and real-time tuning of Flash based visual applications." -
Liquid Components - a free, open source component set for Flash CS3.
Hobnox AudioTool - an impressive browser based audio synthesis/processing tools with a fair few retro synths and effects recreated for your delight.
Hobnox - AudioTool
