Ferrofluid, basically its tiny iron particles suspended in a liquid.

But man does it make for an alien experience. Kinda creepy the way it makes spikes. BTW, I assume this is very similar to the technology behind magnetically adjustable shocks.

not so cool version

Very cool version.

they are working on this technology for use in adaptive body armor.

There's a company with a similar concept and and already working suit. Not sure if its similar to ferrofluid, but it hardens on shock/impact, but is otherwise loose and flexible.
d3o

Crazy...for about a minute.

I was reading this awhile back, i heard they are working on it, but a working prototype, I'd like to see that.

D3o is based on foam/rubber. It was in Wired, which is where i've found it. But its working. Probably a very different technology than the ferrofluid.