While this was posted as a joke for April's Fools by ThinkGeek, it's actually been turned into a functioning device by an enterprising modder. Granted, it's made out of cardboard, but once he makes a more permanent case, it's going to be quite popular.
For Moriya's cabinet, you plug the iPad into a dock. This allows you to control the software with the joystick, thanks to the Arduino micro-controller. While at first both ThinkGeek and Moriya were just joking around, there might be a real demand for this kind of thing. Look at the different types of hacks and DIY projects that we've seen this week. An iBook and a Macintosh Classic were hacked to serve as a docking station.
The only thing that remains to do is to make something more durable than a cardboard cabinet, preferably something made out of wood or Plexiglas. ThingGeek's iCade is available already, and the app will soon be on sale as well. It looks like this concept already made it into reality.