My favorite source for innovation is the TED conference - an annual meeting of the world's most creative minds in politics, the arts, technology and environmental studies. Here is a little treat for you: "Building sophisticated educational tools out of cheap parts." Johnny Lee of Carnegie Mellon University demos his cool Wii remote hacks, which turn the $40 video game controller into a digital whiteboard, a touchscreen and a head-mounted 3-D viewer.
Here is his feature presentation at Ted last year:
Here are some more cool ideas from Johnny Lee's lab: