When the bag is stroked, fabric sensors trigger the bag's behaviors, which include purring (accomplished through LilyPad vibe boards and a buzzer that simulated a cat's purring) and glowing eyes (LilyPad RGB LED's). The stated intention of the team was to create a bag that inspired companionship and warmth: creating electronics that emotionally ingratiate themselves to their users. Extremely cute.
The team's write-up of the project can be found here, and the components that were used are available at SparkFun. Please comment if you have any ideas for other human-electronic emotional bonds that soft textiles could make possible. :D