I like the idea of figuring out how to use conductive material or threads in my capstone project. I read on the MIT website that students have created a denim jacket with a cloth midi interface on it which can be used to create music. I don't exactly know what this means, but I am really interested in the idea of "softening" interfaces. I think people always expect their interaction with technology to be cold and sharp, which makes the introduction of cloth interfaces a potentionally exciting technological development. Here is a link to a page from the MIT site, describing a project about "squeezable" interfaces.
http://www.media.mit.edu/hyperins/projects/shapers.html