Do you remember Zanno? He was on the Blender 2.36 splash screen. Pablo Vazquez (AKA VenomGFX), the creator of Zanno, just published a great video tutorial, applying the new Blender physics (Particles and Soft Body) to Zanno.
The video is available in Vimeo:
If you visit this link, you can check out the full description of the tutorial by Pablo and download a hi-res version of the video.