With the current Nvidia graphics drivers, all CUDA-capable graphics cards with GeForce 8, 9 and GT200 can handle the calculation of physics effects via the stream processors. Nvidia uses the PhysX technology which previously belonged to Ageia. The current benefit is still limited, as many games are optimized for software physics and the physics hardware is neither required nor supported. One example here is Space Siege. It calculates the same explosions, flying debris and spinning gas tanks both with and without hardware support.
To see the hardware in action, there is a PhysX modification pack for Unreal Tournament 3, a benchmark of the game MKZ, and a demo named Warmonger. It will be interesting to see, in the coming weeks and months, what happens when the first games are released with proper support: Cryostasis, Huxley, Shadow Harvest or Brothers in Arms: Hell’s Highway.
Nvidia has a list containing all of the available PhysX games which contain benefits achieved by hardware. There is a lack of transparency, however, as this list still contains games from Ageia which are apparently supported by a patch that cannot be found anywhere. It is also not really clear what the hardware benefits entail, either. Are there additional effects, or is it just that the calculation process is transferred from the software driver to the GPU? Another complaint regarding the list is completeness: it contains games that are not yet available, and does not contain others which have been announced at Nvidia presentations as having PhysX support.
Nvidia’s list for PhysX games: http://www.nzone.com/object/nzone_physxgames_home.html