We have done a lot of interesting things with the Raspberry Pi since it was released. We have done things like build a GPS synchronized NTP server, computer room temperature monitor, and our personal favorite the streaming playback box.
A user by the name of Microbyter has created a step-by-step guide to creating what he calls the Super Mega Ultra Pi Boy 64. The resulting Game Boy emulation handheld was created out of necessity as the components on his Game Boy had reached its end-of-life. Of course you are dealing with some grey legal areas and depending on where you live, this may or may not be legal, but none the less it is still an interesting use of the Raspberry Pi.
It is a great project and looks great. Worth a look at his blog for the rest of the details.