It's taken a couple of years, but augmented/mixed reality finally seems to be making its way onto the consumer market. Playstation 2's EyeToy proved to be a hit, so Sony are now moving on to making virtual pets that seemingly live in our reality. Not a new concept, but that monkey is very likely to be the first AR based celebrity.

Growing up with toys like that will help the next generation of humans to adapt to a world where the border between 'real' and 'virtual' will be thin if not gone alltogether.

Source.

***UPDATE***

...or, you can go the other way around, putting the real into the virtual in a rather hands-in way (excuse the pun):