Technology with personality / role playing?

The Huggable robot teddy developed by MIT Media Lab seeks to interact with user by using the characters (possibly in the future, but teddy bear for now) to overcome the coldness of technologies. The robot teddy is loaded with 1500 sensors on its skin, video cameras on its eyes, microphones in its ears, speaker in its mouth, and above all, an embedded PC with 802.11g wireless networking!!!

The suggested use for this robot teddy is for long distance communications between grandparents and kids, patients and doctors and so on - With its gears, the teddy is like a portal of intercommunication between two, and possibly some sort of role playing from one side to the other.. for example, the grandparents teaching a life lesson to their teenage grandsons or daughters can hide or transform their figure through the teddy -

This article reminds me the book Diamond Age, which I am reading right now and having great fun with. The story evolves around a piece of technology, the primer, which is a form of book that can interact with reader, usually little girls between age 4 to 8. The book tells the story customized based upon the reader's level of knowledge, environment and so on. On the other side of channel, there are people called Ractors (modern day actors, who embedded bunch of cells on their body to transform themselves into whatever characters in digital world), who reads the book for the kids as the script automatically updates from the reaction of the readers on the other side.

Here is the original article.
http://www.physorg.com/news148727070.html