Many Thanks Grumpy Mike for the reply,
from the old post :
I have used this circuit and because I didn't have a large enough resistor, I connected up an LDR.
I then got a smoothed value of 0 and 4 when I touched it. When I covered up the LDR, producing a massive resistance it would give me values of 100-200 when I was ~1m away and then increase to just over 1000 when I walked up to it.
I do take on board your comments regarding clarity of these sensing methods/claims.
I have rejected the ultrasonics method due to purely aesthetic reasons. This project is an artwork and I like the clean nature of using the steel sheet to pick up proximity. Ultrasonic sensors tend to look like little robot eyes 
I have been meaning to look in to the kinect for some time, however aesthetically it would be wrong for this piece.
Is it not possible to replace the 'aerial' in a theremin with my sheet of steel ?
Thanks
Twogan