I thought this was a very cool demonstration of the fluid capabilities of Blender. It shows a "magician" character, who "magically" conjures the water into different shapes:

http://www.youtube.com/watch?v=WruTNnF6Ztg

You can find more info here:

http://www10.informatik.uni-erlangen.de/~sinithue/ani_mfc/

and here:

http://www.blendernation.com/2006/12/13/magic-fluid-control/