Found Footage: $2 multitouch screen, made with iSight
Really incredible. Of course, it's hard to figure out how this could be used for something like the iPhone– instead of a camera, you'd have to have some kind of light sensors behind the dye, and you'd have to figure out a way to have the dye-colored water stay spread even throughout the bag. In fact, come to think of it, I'm not really sure how most multitouch interfaces work– maybe this is closer to the real thing than I imagine. Even if not, very cool idea, and I'm almost surprised to see it really works so well.
[via Waxy]
Update: Looks like the video is a little old– this was posted back in early June, even before the iPhone was released. But it is still really cool, and it's the first I've seen it.