I got an email about an interesting Kickstarter project called "The Unlimited Electric Guitar" by a company called Unplugged Instruments. This is an offshoot of a Stanford electrical engineering project that combines an electric guitar with a built-in speaker and some custom iPhone apps. It looks promising, though the project doesn't have the huge ambition of gTar (nor the polish.) But for someone who actually can play the guitar, it's actually more appropriate.
Check out the detailed video and consider making a donation to back this project. But, as with most instruments, it's not a cheap project. $275 will get you the finished guitar and they are aiming to raise $50k with more than half still to go in the next 20 days.
Update: I received some additional information from the team behind Unlimited Guitar. They will be building out additional instruments including bass, keyboard and drums, each with built in iPhone interface and speakers. (Not sure what that means for drums, but I'm sure it will be interesting.) In addition they are working on "Guataraoke" style backing tracks so you can play along with your favorite songs, interactive lessons and more. So far the team has garnered interest from heavy weights in the music industry including GuitarCenter and ZT Amplification.