Watch this video of the physics game software Phun (then go download Phun and have a blast playing with it!!).
Also, check out this video showing Crayon Physics.
And Crayon Physics for the iPhone.
You can install Crayon Physics for iPhone by adding http://iphone.r4m0n.net/repos as a source to Installer.app.
Finally, have a look at Moovl. It’s in Java, which I refuse to install, but the intro video provides a good overview of the concept.
Doesn’t it inspire you to dream up cool possibilities for games and learning tools?! Have you seen other games or apps that you find completely fun and inspiring?