I've got a Monome and Ableton Live and can do similar with a nice hardware interface and output midi to any of my synths around here- but I've never have tried doing that if it wasn't for this app.
If you can't get ahold of one, check out the Arduinome which is an open source clone of it and operates exactly the same for all practical purposes. Korg and Akai have also made some similar commercial things recently that fit into this market.
That's pretty cool. Others might be interested in a project I'm working on called Syzygryd: http://www.syzygryd.com/
Syzygryd is an interactive art piece that features three grid sequencers that track each others' state. I plan to post something to the main HackerNews site once development is further along.
My daughter (5 years old) loves this. Of course sometimes she ends up with one solid block of lit blocks and I unwedge it for her - but she plays with it for 20 minutes at a time. Right up there with "hot games for girls"!
I made a Mac clone of this as a weekend project a while back. You can adjust tempo and use different scales: http://fileability.net/downloads/Neo_a9.zip (requires 10.6)