Adam Kinney created a fun example squishing bugs to show off Silverlight 4.0's webcam support. He created simple motion detection using a diff calculation on multiple threads to figure out where his finger was to smooth the bugs! Here is a video showing off the project.
If you want to check out the source code for BugCamSmash, Adam has that along with a few other helpful hints at his blog post.
In addition, Adam is posting articles on how he created the application as well.