We've been following the iControlPad project since it was first revealed in May 2008. A new video has been revealed showing the latest prototype hardware which has been significantly redesigned. Their blog explains:
What we got [in terms of feedback on the original design] was interesting, the design worked but obviously needed to be altered for each type of iPhone and the controls were a bit cramped, plus it was quite large to carry. We were not 100% happy with this. If we are going to do this we want to do it right.
As some of you know we have access to the parts used on the openPandora handheld - which has dual analogue nubs.
A sleepless night then resulted a huge design change.
Here's a new video of the hardware playing Mario Kart in emulation (on jailbroken hardware):
This project has always been more interesting than practical as it was originally limited to jailbroken hardware due to the SDK restrictions. The launch of iPhone 3.0 firmware and SDK, Apple announced that the dock connector is now accessible to hardware manufacturers, though we haven't seen it taken advantage of quite yet.
We've dropped them a line about the possibility of official SDK support, and we'll keep you up to date. Developers, of course, would have to provide direct support for such a device, though the developers of C64 the Commodore 64 emulator have already said they would support such a device.