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Ginger - AVR-Based Gainer Clone
From Morecal Lab, ginger is an AVR-based (ATmega88) version of the Gainer physical computing platform (the normal gainer uses a PSoC microcontroller). One of the most readily perceivable benefits of this implementation is that it doesn't require an external USB-serial bridge chip, making this a simple, lower-cost alternative to the FTDI USB-serial version. This format can be adapted to 40-pin and 8-pin (pepper) versions of the device.
Ginger website (circuits, firmware, English)

Homemade Gut Strings from Sausage Casing
Despite their temperamental nature, many musicians still swear by gut strings for their warm tone and response. The CRANE page run by Tsuruda-san has a very detailed how-to (in Japanese, but with plenty of pictures) on making gut strings with commercially available sausage casing. Yeah. Sick but cool.

Biodegradable Balloon Making in Rural Japan
The Ito Rubber Balloon Factory keeps it real by making their balloons the old fashioned way: out of rubber. And you can throw these water balloons without worrying about choking critters, because they're biodegradable:

Mrs. Ito explains: "Recently almost all balloons are made of petroleum-based synthetic rubber, but here we use only natural rubber from rubber trees. When the balloons are brought into sunlight, the colour changes a bit and after a week or so the become a little sticky, but on the other hand they biodegrade eventually."

Okinawa Treehouse Restaurant
The Keebler Elves' clubhouse has nothing on this:

Just north of the Okinawa airport on highway 58, the restaurant sits perfectly on top of a massive Gajumaru tree's huge branches about 20 ft above the ground and looking out over the ocean.

The restaurant has a reputation of being quiet and elegant, while serving some of the best Japanese, Thai, Korean, Chinese and Indian food in all of Okinawa.

Crab Feet - Audio to Video and Back Again
Intensely weird and wonderfully creative vibes from a sort of Acid Mothers Temple-meets-Raymond Scott internetizen by the name of Crab Feet. In the video above, he takes audio and turns it into video and then back again by plugging the headphone output of the iPod to the video input of a TV, then turns the video back into audio by putting a video camera on the TV screen, and hooking the video output of that camera back into an amp. A tad fuzzy, but sure enough, it's there. Next he takes a raw 1/4" cable hooked up to the amp and holds it up to the TV screen, and the sound translates even better! Next, he takes a few pieces of paper with lines drawn on them and makes cool noises, changing the pitch by moving them closer and further away from the camera. Cool ideas from a cool cat.

iPod Touch Cycling Computer
Bring on the physical computing+iPod/Phone hacks! Like most other cycling computers, this uses a magnet attached to the wheel that is sensed by a reed switch that turns on when the magnet draws near it, but here a compass is added to the mix (Honeywell HMC1052L Eval Board) to track direction. Distance, speed, and direction are sent to the digital input from a Gainer to send the information to the iPod Touch for further processing bells and whistles. Without a USB host for the iPod Touch, communication had to be done via the Gainer acting as a serial port. The Gainer firmware was also tweaked so that it would accept the 3.3V from the Touch instead of the usual 5V that Gainer takes. You won't likely be seeing this in the App Store, but this is hopefully the beginning of one of many hacks that interfaces the iPhone/Touch with the physical computing world.

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Shikisai's Perception-Bending T-Shirts
Shikisai offers up a clever line of shirts from the husband and wife team of Hirotsugu and Miyo Noto. The black and white t-shirt designs are drawn by Miyo, and the objects depicted on the shirts stylishyl blur the lines between artistic interpretation and reality. From the English version of their site:

Incorporating the interactivity,the mundanity, and the sense of fun, SHIKISAI is trying to explore the alternative possibilities of t-shirt design, through the use of black print on white surface.