There's been a fair amount of commotion (pun intended -- took whole two minutes ;) from a small company called NaturalMotion. Building on research done at Oxford, they've managed to use artificial evolution to learn controllers capable of producing realistic and stable movement (apparently a very big challenge). I guess this is based on a neural network; you have to read between the lines, but anything that involves a simplified version of the brain is some sort of NN.

The company is talking to game publishers about integrating the technology into next-gen hits. I think this will be possible, but it'll take at least another two generations in my opinion.

There's another article on the same subject, with an interesting commentary.