Afrotech Forums user Dr. West made a functional touchpad out of a piece of paper with graphite rubbed on it:
There isn't much to explain here. It just uses pencil graphite on paper as a kind of two dimensional potentiometer. Four voltage dividers between 5v, 2M ohm resistors, the paper, and my grounded finger feeds signals from each corner into an Arduino. The Arduino does some insufficient math and spits out mouse coordinates that are not linear.
Link via Geekosystem