This interesting demonstration won the second prize at the 8th Annual Best Illusion
of the Year Contest at VSS this year. It was presented by Matthew Thompson, and who recently published a paper with his colleagues describing the effect in Perception (Tangen, Murphy & Thompson, 2011).
You can also read the story of the discovery of the flashed face distortion effect in the UQ Psyc blog.
Tangen, J. M., Murphy, S. C., & Thompson, M. B. (2011). Flashed face distortion effect: Grotesque faces from relative spaces. Perception, 40, 628-630. doi:10.1068/p6968