The concept behind BumpTop 3D Desktop is that people organize (or disorganize) items on their desk to convey information by how and where they are placed, and that this could be simulated on the computer desktop using a 3D physics engine.  For example, let's say that you keep piles of papers that have to be processed by the end of the week on one part of your desk, say an IN box, and you move them to an OUT box as you deal with each one.  With BumpTop 3D Desktop, you could do the same thing with icons of files because the icons become 3D stackable objects.  You can even change the orientation of the file so that certain files stick out visually from the rest. 

The physics engine is used to make the items act like real items on the desk, and you use circular motions like the ones you use with a Pocket PC to manipulate the objects.  The prototype video mentions a pen, but it's not clear to me whether a stylus or other pen-like pointing device will be required for this to work.  If they got the physics engine working as well as it appears in the video, it would be easy for them to make a fun casual game.  However, I don't know that I'd want to do it to organize my files on a regular basis.   I do like the concept of being able to arrange my desktop in 3D space, but I'll reserve judgement on the interface until (if) they come out with a working demo.

You really have to watch the video to appreciate what these people propose to do, so check it out. 

http://www.youtube.com/watch?v=M0ODskdEPnQ