While I don't own any Arduino components, I'm quickly becoming captivated by the potential of this platform to encourage kids to play, tinker, explore and create cool objects that they dream up. Arduino is a powerful open source hardware programming system that is used by engineers and artists alike. See this article from the New York Times on how artists and museums are using the platform to create interactive, low cost exhibits.
I'm much, much more excited about the potential of Arduino in K12 than any emerging educational technologies, including the iPad. I could see kids making interactive toys, alarms for their rooms/lockers/lunch boxes, interactive displays for their art work, and more. Arduino is interdisciplinary by nature and brings together skills from a wide range of disciplines.
Below you'll find just a few videos that demonstrate the kinds of things that can be built on this platform. I think they'll give you a sense as to why I'm so excited about Arduino!
In the video below, a guy shares his Arduino based system that he used for locating his bike in the herd of bikes at Burning Man. His project description and write-up is posted here.
Interactive Talking Toy:
Interactive Talking Plush Portal Turret from Jonathan M. Guberman on Vimeo.
Arduino controlled 'Wirebot':