iSkin seems to be an idea or prototype for sensors that can be worn on the body. I liked their video; check it out. Lots of good detail on how it could be done. It's more stretchable than skin!
(iSkin on-body touch sensors)
We propose iSkin, a novel class of skin-worn sensors for touch input on the body. iSkin is a very thin sensor overlay, made of biocompatible materials, and is flexible and stretchable. It can be produced in different shapes and sizes to suit various locations of the body such as the finger, forearm, or ear.
Integrating capacitive and resistive touch sensing, the sensor is capable of detecting touch input with two levels of pressure, even when stretched by 30% or when bent with a radius of 0.5 cm. Furthermore, iSkin supports single or multiple touch areas of custom shape and arrangement, as well as more complex widgets, such as sliders and click wheels. Recognizing the social importance of skin, we show visual design patterns to customize functional touch sensors and allow for a visually aesthetic appearance. Taken together, these contributions enable new types of on-body devices. This includes finger-worn devices, extensions to conventional wearable devices, and touch input stickers, all fostering direct, quick, and discreet input for mobile computing.
Seems like I was just looking into this idea. I'd suggest that you read John Varley, in particular Steel Beach:
Call me old-fashioned. I'm the only reporter I know who still uses his handwriter except to take notes…I snapped the fingers of my left hand…Three rows of four colored dots appeared on the heel of my left hand. By pressing the dots in different combinations with my fingertips I was able to write the story in shorthand, and watch the loops and lines scrawl themselves on a strip of readout skin on my wrist...
(Read more about John Varley's handwriter)