NPC (or In-PC)
I've had this fantasy ever since console games went CD, e.g. Sony Playstation, that Sony make a "Playstation drive" that could be installed like a regular CD-ROM drive, but would take advantage of computer hardware. NPC/In-PC is an evolution of that idea.
The kit would include, most prominently, a DVD-ROM drive. It would come in various colors, to coincide with case colors, or have a faceplate that could be removed. This drive would either be EIDE, SCSI, or some other advanced interface, but either way, it would be proprietary. The drive would additionally feature 4 USB ports (for controllers) and a Memory Stick drive (for save game portability). More on that later.
It would not be easy to install just because you would have to have a PCI slot free to install in. The PCI card would contain a CPU with enough MHz to supplement the lowest computer and enough RAM. The idea is that you could plug this kit into some ghetto machine, and it would run on its own resources, but if you put it into a faster machine, it would take advantage of that computer's resources, including sound card, video card, etc.
The controllers would be USB, and normal USB controllers could be used with software if they had enough buttons. They would plug into the face of the unit.
The games would default to save on the hard drive (they would be very small files) but a built in memory stick reader would allow for portability. Saves could also be emailed, posted on the Web, or whatever.
As for the software, it would install to Windows or Mac or whatever the drivers that would let you use the kit as a regular DVD-ROM drive when not playing games, and a program which would start the console. With no game inserted, this would let you specify settings like controllers, audio, video, taking advantage of the computer's resources, etc.
The games themselves would be stored in a proprietary file format readable only by the kit, and thus, would not be copyable. For example there would be no Table of Contents, no error correction, just raw data. The proprietary software would know what to do with it, however.
As for implementation, it could be used as a springboard for Sony, Microsoft, or Nintendo, if any of those companies wanted a system that could integrate with the PC rather than the television, for the purpose of avoiding all the disadvantages TVs have on computers. It could also be used as a third party console, and updates to the software could include emulator functions for example to either play other console games e.g. Xbox and GameCube (the drive would be tray style with the 3" inner ring), or to play a CD-ROM or DVD-ROM filled with N64 or Super Nintendo roms through a simple file-manager type interface.
Read what people replied on Entrenched (a tech forum I visit)
Read what people replied on Disturbed's forum (the rock band)