Mitsubishi Electric Research Lab (MERL), and Paul Dietz in particular, seems to be working on something called Submerging Technologies (as attested by this SIGGRAPH presentation):

Goal: To show, somewhat whimsically, how emerging sensing technologies can be applied in unusual ways. Three interactive water displays: a tantalizing fountain that withdraws when a hand comes near, a musical harp with water "strings," and a liquid touchscreen.

Enhanced Life The displays apply emerging sensing technologies to the medium of water. In each case, the electro-optic properties of the water itself are exploited to make the water a fundamental element of the sensing system.

While there are serious industrial applications in coating, painting, and soldering for these sensing technologies, this project focuses on human interaction. The larger point is that as new sensing technologies become available, they can and will be used in very surprising ways to change how we interact with our world.

Why do I blog this? that's a curious context with challenging issues in terms of User Experience and human-artifacts interactions.