GPU accelerated physics has been a promise by video card developers for years. Because of the highly-parallel nature of physics calculations, the many simple processors in a graphics card are able to perform these calculations faster than a CPU can. Very little progress was made in this area, however, until Nvidia bought Ageia and it's Physx API, which makes it easier for game developers to integrate realistic physics into their games. When Nvidia bought Ageia, they developed a way for Physx to run on the video card instead of needing a separate physics processor. Because only PCs with Nvidia graphics cards are able to run Physx, many game developers are not willing to support it. This has been one of the major stumbling blocks for GPU-accelerated physics, but there is still hope thanks to DirectX 11.
Microsoft's DirectX 11 will bring the "compute shader" which basically turns the graphics card's dedicated video hardware into general purpose processors. These processors can be used to perform many types of calculations, including physics. Right now, the video hardware is used almost exclusively in 3D rendering, but with compute shader almost any task becomes possible to perform on the GPU.