DX10 gives access to the Geometry Shading Unit. A new logical processor on the GPU (like the pixel and vertex shader).
Physics engines aren't using this functionality yet. Ageia PhysX flopped because noone wants to buy a new card just for the odd bit of shrapnel. Soon everyone will have the ability to hardware accelerate physics... and as soon as we do, developers will give us in game physics never before possible.
I dev VR software for Med training. The geometry shader has enabled a new field of touchable interactive applications central to simulation. Games are only the half of it.