Robotic pets are kind of kid stuff here in the US, but they're a big deal over in Japan, and here's one that takes advantage of the iPhone's popularity. The Smartpet is a robotic dog that "borrows" the iPhone as head unit. The body is mechanical, of course, but the head uses the iPhone's touchscreen (and even the camera) to control the dog's movement.
Not only does the touchscreen show over 100 different facial animations for the virtual pet, but apparently the included app will also learn to recognize your face and voice, and will recognize gesture movements through the iPhone's camera.
There's no word on availability for North America yet, and this one may not make it over here at all. It will be available on April 24 in Japan, for around $80.