Binaural records convincingly reproduce location of sound wherever it comes from during recording: behind, ahead, above, or below. If you have never heard a binaural (sometimes called holophic) recording, download this short mp3 sample (~1.80Mb, mirror1, mirror2) and listen to it with your headphones on (any headphones work, including earbuds).
Wikipedia explains that "a typical binaural recording unit has two high-fidelity microphones mounted in a dummy head, inset in ear-shaped molds to fully capture all of the audio frequency adjustments that happen naturally as sound wraps around the human head and is "shaped" by the form of the outer and inner ear." You can also buy in-ear mics and go without the dummy head; you can get a set by Sound Professionals for about $70.
Wouldn't it be cool to record binaural ads or an entire podcast and put them up on iTunes for download? While the technique wouldn't work for radio ads (the "surround sound" effect can only be reproduced on headphones that few use with radio), binaural advertising would entertain the populous iPod nation.
Binaural.com sells binaural radio dramas, but seems they are not taking orders at the moment. You can also buy ringtones here, although I'm not sure how that would work. Quiet American is an artist who records ambient sounds. Audio Collective is doing an experimental podcast, and O'Reilly gives tips at putting together your own recording equipment. And in 1993, Stephen King published a full-cast dramatization of his early Mist novel.