In Vampire Bloodline, the clothes (dresses) seem to be physically simulated. I'm pretty sure we could make good looking curtains (we'll have to wait for the full SDK though).
What the hell, you already made a post about this... ??
EDIT - I accidentally had my date set back to 2001 and it only showed polypod's first post, very weird... and kinda scary. Like living in the twilight zone...