Smashing Magazine released an article today showcasing several sites which utilise innovative navigation and transition effects.
Lift uses a nice book transition where, on hover, the book appears to rotate so you can see the spine.
It also has a very smooth front panel CSS transition effects.
Etch has a nice site design.
Toybox has a very stylish design and a cool navigation where the whole screen pivots to show the side bar.
There is also an animation of the images on hover whereby all non-hover elements shrink to the background.
Silktricky has a nice home page providing a series of images and explanations of its articles.
On hover, the elements of the relevant article are highlighted with cover and with a small slide of the image.