I'd say an awful lot of innovation continues to come out of the Smalltalk community. Alan Kay has just announced an alpha of an environment called Croquet. Its sort of a return to first principles. The original Smalltalk idea has a sort of fractal notion of objects as servers - which is why Smalltalk uses "messages" rather than functions like Java or C++.

The Croqueteers have taken this to a new extreme in Croquet. You can see what they've wrought if you have Windows (other versions are coming but there is some OpenGL support that needs cleaning up in the VMs). This is written in Smalltalk (Squeak) on top of Morphic and it is a rather amazing demo.

At the very least the paper is a good read:

[link|http://www.opencroquet.org|http://www.opencroquet.org]

The server is slow. I'd start with the paper and see if you want to proceed. Also, a warning that the pdf is somewhat broken and only readable in acrobat. Also, if running the demo, read the docs - the window with the url that comes up first wants a "cancel". This is still very alpha. But its cool.

Basically - the idea is that every object is a tiny server. I think this isn't strictly true for objects that represent values - strings and numbers - but if you read the paper, they take the idea that any object can be messaged anywhere. The fractal bit is that most object methods are written in terms of messaging other objects which are also little servers. Scale it up and you have what amounts to ubiquitous networking.

They start with new assumptions including:

1) The world is filled with fat pipes
2) Graphics power is nearly unlimited

Read the paper. Its quite good - especially the appendix by Alan Kay.

The Smalltalkers have always been way ahead of the hardware curve.

Which is good - by the time they get it worked out, the hardware will arrive.

I also particularly like the comparison of current software development with Egyptian architecture and the characterization of the pyramids as a garbage dump with a lid.