Fuzzy logic
Ben N. points to the Teddy Borg. Three bored MIT students took apart a teddy bear (including turning it inside out) and installing some computer networking hardware in it. The photo on the front page is pretty nondescript; it's easy to miss the little scars in the stuffy's footpads. But you should definitely follow the link to the tour section. In particular, be sure to look at the Matrix-style connectors at the bottom of page 3, and the "action shots" page—click the thumbnail on that page for a larger-size one, which is the best part of the site imo. Spooky. I bet it's even spookier with the eyes flashing on and off. You may also be interested in the poll (which reveals whether the bear is "Cute," "Evil," "Cool," "Sick," or "Desirable to geek chicks") and the FAQ at the end (which isn't as entertaining as I'd hoped, but does provide some interesting info).
In response, Charles D.pointed to the Furbeowulf Cluster, providing photos and a historical overview of the use of Furbys in massively parallel processing design:
When Linux was first ported to the Furby platform, it suffered from significant stability and performance problems, which gave the Furby an unfortunate reputation as being unsuitable for enterprise-level computing. The conversion of the IRS and NASA computing facilities to Furby-based platforms towards the end of 1999 was seen by many as premature and may have contributed to the problems experienced by those departments during 2000....
Unlike the Teddy Borg, the Furbeowulf Cluster page appears to be fiction.
(For those unfamiliar with the term, a "Beowulf Cluster" is a cluster of cheap computers running a free operating system that are networked together to be able to work on a single task all at the same time ("in parallel").)