Here are some of the many different things I've found on the net. For a complete list of cool Arduino projects I've found just follow this link. Some of the projects listed below don't use the Arduino, but they all could.
Originally written in Spanish and translated by Google. This one uses the Arduino as the brains for a robot. It looks very doable.Perpetual Motion Machine
Use the Arduino and electromagnets to create a pendulum that never stops.Keyless Entry system
If you don't know the correct way to knok, you can't get in.POV with Arduino
Persistence of vision machine.(Here's his refined code)Make Sound
Cool synthesizer type project.
Use the accelerometer and such with your Arduino. Could be used for a CPR trainer or maybe a running/walking pace setter (if you slow down or speed up it could let you know)Control Arduino with a TV Remote Control
This will take some tweaking, depending on the remote you haveUse the Arduino as a TV Remote Control
Pretty easy, but will take some tweaking.Read data from a Servo
Not just a motor, it can function as a sensor.Music/Sound
Collection of sound/music projects
Cool little robot that drives around and drums on stuff.Control the Computer
Use sensors on the Arduino to interface with programs running on the computerBetter Temperature Sensor
A much better way to measure temperature.Trigger a different device
This one triggers a camera to take a picture, but the same sort of thing could work for other devices as well. Here's a similar one used for high speed photography.Use an old Mouse
I'm not talking about Mickey. Here's a way to use an optical mouse with your Arduino.