This is Valve's Steam Controller, which they have been working on for over a year, and what Valve says was designed to work with all games on Steam, old and new. That doesn't mean it's necessarily optimized to play those games from a experience standpoint, but that older games on Steam that don't have native support for gamepads will recognize Steam Controller as a keyboard and mouse.
This is not like the Xbox 360 gamepad. Instead of control using two thumbsticks, the wireless Steam Controller has two large circular trackpads, which Valve says are equipped with high-resolution sensors. The surface of the trackpads are also clickable. Using (likely capacitive) touch sensors as opposed to analog sticks will let the controller detect nuanced changes in movement and acceleration. Valve goes as far to say that its controller is suitable for strategy and cursor-driven games. The trackpads also provide precise haptic feedback, but not through rumble motors like those in console controllers. "Dual linear resonant actuators"--magnets--will supposedly provide a range of force feedback and vibration, and even some audio.
Steam Controller also has a touchscreen, which itself is clickable (remember the BlackBerry Storm?). Valve says the screen is high-resolution, but offered no other details, other than it is programmable using a new API for use as a menu, radial dial, or second screen data display. Touching the controller screen will display the same information on top of the game, so users won't have to choose between looking at their TVs or down at the controller.
To give an example of how the controller could be configured for a first-person shooter, Valve released this theoretical button mapping guide for Portal 2.
Steam Controller will be made available to the same lucky 300 beta participants that Valve is sending prototype Steam Machines to at the end of this year, though those controllers won't be wireless or have the touchscreen. Steam Machines won't require the Steam Controller, and you won't need a Steam Machine to use one on your existing PC.
Suffice to say, we'll be testing this in depth when it becomes available.