I posted some previous versions of my design here while I was working on it about a year ago.
I finally finished it and presented it at TEI (http://www.tei-conf.org/12/).
I use an Arduino Fio with an Xbee to communicate with my computer. I measure the movements with two counteracting stretch sensors for each degree of freedom. (with three total degrees of freedom.)
This is just a quick video I made, using it to control volume and pitch of two sine waves:
Anyway I got a lot of input on this project from people in this forum and it would have never been possible without all the things I learned on here. A big thank you to the Arduino community.
More infos on this and other projects can be found at www.paulstrohmeier.info