Since the pen is a pen, and there is not a keyboard on it, I have some ideas. We want this to be a usable, but cheap/easy project for people. So the suggestions below I had:
#1) Wii Gestures
Mouse gestures, with a Wii name (haha). But, this will bring up common things such as a browser.
#2) Text Fields
I would like to see something where you click on a text field, and someone writes using there handwriting, then it reads off each letter and prints it along the bottom as they write. So someone spells "Hello", in the middle or anywhere of the screen, they draw "H". The computer checks, finds its H, moves it to the bottom left and the H drawn fades. I'll make a little demo of what I mean.
#3) Colors
I have no idea how you could do this, but if you start making the IR Pens, somehow different colors would be really cool. I would pay $50 myself for a set of 8-12 "colored" pens.
Those are my ideas. I think they would all improve the use alot. I am a programmer, it just I do java, and some of these things I do not see being done easily. I would expecially like the Text Fields, and will start on that image right now.
~Kris