Watch this:

Then check this out:
There was a Wii Remote with Silicone Sleeve + Nunchuck Controller for Wii (Black) OEM $40 - on one of the "deal a day" websites, but that deal is over. Search the Internet for your best deal.

 

It would be cool to use this to draw in sketchup and also control mach 3!

 

I've put one of these together for testing at our college. It works! I bodged together a pen with components from Radio Shack and an old whiteboard marker - was just able to squeeze in a regular AAA battery holder (some instructions recommend using an N cell, but I wanted to be able to use rechargables that I already had).

There's a lot more information (forums, shopping lists, pre-built IR pens, Wii remote holders, etc), and some more functional software (Mac and PC) over at http://WiiTeach.net.

Johnny Lee has a number of really cool projects, including demo videos. His project page is at http://johnnylee.net/projects/. The Wii stuff (finger PC interface controls a-la Minority Report, Head Tracking) is fun, but the projector auto configuration blew my mind.