The Logitech io2 Digital Pen is just like a normal Ballpoint pen in shape as well as grip. It even uses ink for writing but the big difference is that everything you scribble / draw with this pen is captured in it's memory and can be easily transferred to the computer for editing.

Unlike the Wacom Graphire4 Tablets, Logitech Digital Pen is connected to the computer only during data transfer which is done via a docking cradle.

And just like a Tablet PC, the accompanying software will recognize your handwriting and convert it to editable text.

Here's how one of the fans of Digital Pen use it:
This tool has been a lifesaver at the construction site for my company's new factory. I just hand the contractor the pen and paper, and he draws diagrams or details changes. Then I distribute PDFs of his notes to my project managers
The only downside is that this $150 pen requires a special Logitech paper to capture your writing strokes and that costs around £5 for 80 pages.

Consumer Reports finds this a nifty idea, but even a trained pen missed about 1 in 13 words. Also, every line on the notepad becomes a separate line in the electronic document, and you can’t make corrections as you write.

The ZDNet review of Logitech Digital Pen is fairly positive but keep the digital pen charged (a single charge is good for about 25 pages of text or three hours' use) and remember to use it when writing on digital paper.