It's pretty wild to have seen the iControlPad go from idea to concept to production, and here's the final step straight from Engadget: video of the device working just as planned. ZodTTD is playing quake4iphone on it, and while the naysayers will probably still have some nays to say, I'm convinced. If Apple is as serious as it seems about turning the iPhone and the iPod touch into serious gaming devices, it would be worth selling something like this as an official accessory. It's fine and good to say that the multitouch screen works even for traditional controls, but so far, we haven't seen a developer that's been able to put "buttons" on the screen and still be able to make worthwhile use of screen space.
As Engadget says, there's still no price or release date on the iControlPad, and given that it's working on jailbroken games right now, there's no sign yet that we'll have any official App Store support. But it's an idea for which the time, in my humble opinion, has come.