capacitance touch screen help

i have always wanted to experiment with touch screen tech, and i was wondering if any of you could help me design something like the ipod touch screen. it doesn’t need to be clear just sense the X & Y location. is this possible with the dimensions being 8x8. i have seen something like this done but in 3D heres the link. how would i do this in 2D

Freescale.com has a lot of capacitive touch panel chips that talk over i2c. I haven't used a lot of them but I do have a couple of their reference designs outlined in this whitepaper:

http://www.freescale.com/files/sensors/doc/white_paper/PROXIMITYWP.pdf?fsrch=1

They're just arrays/wheels of capacitive pads. I think doing a full screen would be really hard or you'll need to get sophisticated controller. I'd suggest reading that white paper and looking around the Freescale site a bit, they have a great sample program if you're capable of doing SMT parts, otherwise good luck finding breakout boards/etc for some of those chips!

Have you seen the touch shield for the arduino?

http://www.makershed.com/ProductDetails.asp?ProductCode=MKLW1

Sure its expensive but it gives you a nice little OLED touch screen.

Dealextreme have spare resistive touchpads for many of the phones with touchsceen, they are rather cheap, but no way near 8 by 8 of course.