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Microsoft’s research lab in partnership with researchers at Carnegie Mellon University has brought life to a true sci-fi-secret-agent concept: Using skin as a touchable gadget! The general idea is simple: A projector displays images somewhere on your body — say, your arm, for example — and a sensor captures your touch. Really cool, right? With such technology you can play games, control an MP3 player, make phone calls, and much moreā€¦the possibilities are endless. For a more detailed explanation of the invention, check out the video:

Via:
http://www.newscientist.com/article/dn18591-body-acoustics-can-turn-your-arm-into-a-touchscreen.html
http://research.microsoft.com/en-us/um/redmond/groups/cue/skinput/
http://www.wired.com/gadgetlab/2010/03/skinput-turns-your-arm-into-a-touch-screen/
A projector displays images somewhere on your body