Have you ever heard of augmented reality?  Basically it is a concept where virtual objects are displayed in the real world via a special pair of glasses or even your camera enabled cellphone. 

For example, when viewing the ground through your cellphone camera, you might see a soccer ball, which you can kick with your foot.  The soccer ball doesn't exist in real life, but is generated by your phone.

It's a pretty interesting concept and there have already been experiments where they've made large virtual games of pac man on a college campus.  If you are wearing the glasses you can see the dots and you run around campus walking over them.  A GPS is part of the setup to track your movements.

These technologies are still pretty new and conceptual, but development is picking up steam and I don't think it will be long before we start seeing this technology become widely available.  You can already download concept games for certain mobile phones if you look around.

So imagine this: let's say ten years from now the technology has developed enough to where you can wear a pair of these glasses which are completely non-intrusive and not ridiculous looking.

You're walking down the street and in addition to seeing real people, you are seeing virtual people who are actually sitting at home on their computers controlling a character.  With a microphone and a headphone, you can even go up and talk to these people (at risk of looking completely crazy to people without the glasses).

You can see virtual buildings, objects, crazy look animals, etc.  Imagine how cool it would be.  The real world meets the Internet world and becomes one. 

It sounds like something out of a sci-fi novel, but most of the technologies already exist.  Huge virtual worlds with real world value have already sprung up, like second life.  All it would take is to overlay something like second life over real world maps.

Cellular technology is good enough to provide a fast enough wireless link, and GPS accuracy for civilians is nearly good enough to do location based processing.  GPS, cellular triangulation, an internal compass, and automatic ad-hoc networks with everyone else who is connected would probably be enough to fine tune the location based data. 

I don't care how nerdy it is, when technology like this becomes available (and it will so long as the world last another 10 years), you will see me walking down the street picking up things that don't exist, putting them in my backpack that doesn't exist, petting a dog that doesn't exist, and talking to people who aren't there.  Unless of course, you're hooked in - and if you're not you'll be the nerd.