This site is a riot! You upload faces into the elf template (very, very easy) and then voila! You're a dancing elf! You can have up to four people in an elfish chorus line.
Elfyourself.com is the site, and I've had two people cycle this to me so far. People are having a lot of fun with it.
Here's me as an elf:
elfyourself.com - Barbara the Dancing Elf!