Flexpad is a technology that allows for the manipulation of a display, in this case a sheet of deformable paper material, to directly affect the image on that display. It uses the Microsoft Kinect to sense physical changes and translate them into a correspondingly deformed image.
An apparent difficulty in this prototype is keeping the image perfectly aligned on the sheet - the blank edge of the sheet is frequently visible as the system constantly adjusts the projection to fit. However, this technology might be more successfully applied to a stationary object, perhaps mounted on a table or wall. The system's response to the manipulation of an object seems quite accurate, and it is only the moving of the object through space that seems to cause problems.
The obvious drawback of this technology is that it requires not only an external sensor (the Kinect) but an external projector as well. This is why I think it would be so much more useful if the object to be manipulated was physically anchored in some way.