A couple of researchers at Carnegie Mellon University, apparently tired of this whole touchscreen vs. button debate, have decided to just do away with the distinction entirely.
The video below explains the concept in depth, but here's the gist: A hard acrylic chamber, perforated with fixed button shapes, is surrounded by latex on both sides. A pneumatic pump pressurizes or depressurizes the central chamber, either depressing or lifting the areas above the button holes. Display duties are carried out through rear projection, and (multi!)touch tracking is dealt with via finger-tracking cameras.
The effect is seamless. It's still in experimental stages, but no single part of this technology is especially novel or expensive, so it's semi-plausible that we could see something like this make it to market in the near future. Unfortunately, the bulky nature of this particular system precludes use in portable products, but it would work just fine in larger ones, like the in-dash computer seen in the video.
Size will inevitably come down, power needs will be addressed, and such a screen's uses will widen. This generation may one day be asked, "Dad, was there really a time when touchscreens and buttons didn't peacefully coexist? Really?" They'll have to reluctantly answer, "Yes, son," eyes turned toward the ground, "but would that we forget..." [Tech Review]