Take a $40 Wiimote, an infrared emitting pen and you have the makings of an interactive whiteboard (No Nintendo Wii required). Johnny Chung Lee has been experimenting with the Wiimote. The Wiimote connects to the computer over bluetooth, and inside it is an infrared camera that can track up to 4 LED sources.

Check out the video of it in action:

Now to find a source for some infrared penlights or make my own and try this out. With projectors costing less than $800-$900 this would be a very inexpensive way to bring interactive whiteboard technologies into the classroom.