Digital Luthiers Develop The Reactable

reactable: improvisation demo

Team designer Marcos Alonso explains:

The reactable, is a multi-user electronic music instrument with a tabletop
tangible user interface. Several simultaneous performers share complete
control over the instrument by moving physical objects on a luminous table
surface. By moving and relating these objects, representing components of a
classic modular synthesizer, users can create complex and dynamic sonic
topologies, with generators, filters and modulators, in a kind of tangible
modular synthesizer or graspable flow-controlled programming language.

This instrument is being developed by a team of digital luthiers (Sergi
Jordà, Martin Kaltenbrunner, Günter Geiger and Marcos Alonso), at the Music
Technology Group within the Universitat Pompeu Fabra in Barcelona, Spain.

More information is available via the Reactable Website which also has a good overview of related tangible musical interfaces. See also Wikipedia reacTable

Here's an organic interface that takes a more fluid approach...

Toriton Plus: Water Surface as Music Controller II