If one would ask me what are the most fascinating innovations in the field of wireless over the last couple of years, I would undoubtedly include Software Defined Radio (SDR) in my list. I love the mix of analog, digital, software and hardware that it involves.
As a part of a tutorial that I prepared on the topic, I developed an introductory example using the USRP2 SDR (available from Ettus Research). Here is the unit with the cover removed:

This unit has a 50 MHz to 860 MHz TV receiver plugged-in. The analog to digital conversion of the radio signal is done by a specialized chip. A FPGA does digital down conversion. The samples are sent to the computer for processing, through a 100 Gbps Ethernet interface .
The software part runs in the Linux environment using the GNU Radio toolkit. The radio is actually programmed in Python. The following video demonstrates my example. The file radio.py containing the code of the radio is briefly opened. Then, the execution of the Python software is launched. On my system, I need to explicitly connect the sound card. The radio is tuned to the Ottawa CBC radio station.
The USRP is very popular with experimenters. It has been used to demonstrate vulnerabilities of numerous wireless systems such as car computers, pacemakers, GSM, Bluetooth, WiFi and RFID.
All contents of my tutorial is available here.
It will be presented next in October, in Montreal, at the CRISIS 2010 conference.
Hello Sir, It was Great to see this video of USRP2 and GNU Radio.
Sir can u plzz tell me how to interface USRP2 with Matlab/Simulink , I want to Do the Same FM Receiving using Matlab. I will be very Thankful to you