Leah Buechley Kanjun Qiu* designed this hoodie at the MIT Media Lab using a LilyPad Arduino, power supply, LEDs, tiny speaker and iron conductive fabric.*
I've looked at a ton of light up garments, El Wire, etc. This is one of the most tastefully- and artfully-done articles of clothing I've seen as of late. Instead of hiding the electronics, the graphic on the back integrates, even highlights the main board.
Really well done, imho.
The how-to up on Instructables is thorough and straightforward. Considering a handmade touch-sensitive hoodie can fetch $6 300 (not kidding!), you really should try going for it on your own.
*Update: Kanjun Qiu (who appears in the demo video) actually designed and built the hoodie while she was an undergrad researcher in Leah Buechley's lab.
*Here's a good assessment of various types of conductive thread.