I went to a preview screening at SDCC for Laika's upcoming film, Coraline, due out Summer/Fall 2008. It's a stop-motion flick based on Neil Gaiman's story of the same name, and directed by Henry Selick.
Teri Hatcher stars as the mother, with Dakota Fanning as Coraline herself. The amazing thing about the footage shown (sorry no cameras allowed guys!) was that the puppets now had squash and stretch on their faces, and many overlapping elements such as hair and fur (on the dog). Apparently, a new surface is being used called "dragon skin" that has a stretchable quality, and allowed for fat jiggles on a particularly fat character's face, all the way to subtle squashes for anticipation on Coraline's face.
I'll keep you posted if I find out anything more.
[Update] I also forgot to mention that Coraline will be shot in 3D - one of the shots shown was viewed with the special 3d glasses. The scenes and depth looked incredible! (Even though it is annoying for eyeglass wearers)
[Update X 2] Check out this account of the same screening on Aint-it-Cool