There is some pretty amazing work being done on Compressive Sensing at
the moment.  Really it offers very lightweight compression of sensor
signals (allowing the data to be compressed by a cheap microcontroller
for example). Followed by more complex decompression on say a PC.
It's repercussions go way beyond that however into AI and data fusion.
There is an introductory article here:
http://www.americanscientist.org/issues/pub/2009/4/the-best-bits

I also have a very simple but effective Moving Average Filter based
Compressive Sensing algorithm here:
http://code.google.com/p/lemontree/downloads/list

Sean O'Connor