Alex Aylesbury responds to requests here on BlenderNation and explains how he created his floating balloons.
Alex Aylesbury writes:
We posted a little example of Camera Tracking using Blender during the Summer on BlenderNation, and a couple of comments asked how we did the Balloon Simulation. It's a quick and easy process, but when we did it we had to experiment a fiar bit to have a Rig hold and move the string. We've done a short video tutorial, and you can download the .blend file that we made in the tutorial.
We hope some of you find it of use.
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Blue red and yellow balloon floating in the air.