Sun's Project Looking Glass (video) is in the news - the story made the front page on google news, and it's on the front page of the sun site. The video's got quite a bit of eye-candy, but doesn't really seem to offer much in terms of usability. Flipping windows around and typing notes on the back might be nice, I guess. The rest looked great in a demo, but that's it.
A comment in the Seattle PI article indicated that MS Research talked about something like this 4 years ago - TaskGallery (video). It's an ugly site, and comparing the two videos shows the huge advances video cards have made in 4 1/2 years, but if you can look past that you can compare the actual usability aspects (i.e. what you'd want to use day after day vs. what you'd want to show off), the TaskGallery approach goes quite a bit further:
(you really have to watch the video to get the idea)
Both are interesting, but I think I'll save the 3-D for Gorilla at Large.
A funny sidenote - the Sun demo repeatedly points out that a 3-D desktop is the kind of thing that can happen when the software community as a whole approaches a problem as opposed to a single (unspoken “eeeevil”) company. Funny that MSFT was working on this 4 years ago... Good thing Sun's on an innovation rampage with the Java Desktop...