Guardian Gamesblog points to a recent Businessweek article on the use of virtual reality and Full Spectrum Warrior as experimental treatments for post-traumatic stress disorder in American soldiers. It's part of a study going on at the Virtual Reality Medical Center in San Diego, and funded by the Office of Naval Research.
Businessweek: "Full Spectrum Warrior's designers have taken their game and meshed it with the VR hardware experience of Virtually Better to make an emotionally stimulating program incorporating the sounds, visuals, feelings, and smells from Iraq. 'Evoking emotion in a simulation, even in training, is a fairly new idea for us,' says Shilling. The simulation uses VR headsets to immerse the patient in the world. It also uses bass shakers that rumble the patient's seat and a smell machine that can create scents."
Guardian: "It will be fascinating to see if this therapy provides new insights into bringing emotional resonance into games. Videogame designers have learned a lot from war - what, if anything, will they be willing to learn from its psychological aftermath?"
There's more info, as well as some video, in a 2005 NPR segment on the same by Xeni Jardin. She mentions that the project is in collaboration with the Institute for Creative Technologies, which developed Full Spectrum Warrior.