Build your own MP3 player that fits inside an Altoids gum tin. Charges its internal battery over USB and mounts itself as a drive, runs for 12+ hours on a full charge and looks very cool. Full instructions here, including schematic (they'll post source code soon), or they can build it for you.

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Connect your midi instrument to your computer and jam with musicians around the world. I built a similar technology almost 20 years ago so a friend and I could jam together through a 1200 baud modem connection. Unfortunately, there was enough delay that it wasn't much more than an interesting curiosity.

This site charges to jam with others, but as the mechanics are very simple, if it becomes popular, I wouldn't be surprised to see open-source versions pop up quickly.

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Sven König wrote software that will take a piece of music/video and automatically divide it into 16th beat samples. It will then listen to another sound-source (such as your voice), and find the best match for each sample of your voice in the original group of samples. It does this real-time, and interesting performance art can be generated with it.

To be honest, I'm not thoroughly impressed with the actual songs/videos it produces, but it's a great concept and the raw technology can no doubt be be improved and used by other technologists and artists to interesting effect. The site is a bit daunting. You may want to check out this video for a quicker understanding.

Mike Walters built his own Mellotron from a set of old Walkmans. The Melotron , invented in the early 60s, was the original sampler, playing one tape loop for each key pressed.

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A musical composition built entirely inside the Windows Sound Recorder tool, using stock sounds from Windows (dings, chimes, etc.)

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