It's an FPGA-based shield that goes on top of an Arduino. Graphics are done on the FPGA, I think sound is too.
[youtube]http://www.youtube.com/watch?v=EWn-6FB4cNQ[/youtube]
http://www.sparkfun.com/news/603
http://excamera.com/sphinx/gameduino/
EDIT: No, I definitely didn't make this. I was browsing SparkFun when I saw a post about it on the front page.