I just watched Drag Me To Hell last night along with the video diaries part. I learned several things from it and thought I'd share a couple which could be applicable to this board.
1. Shadow puppetry could make for great special effects. While I'd say that most, if not all of the creepy shadows in this movie were CGI, it did put enough of an idea in my head that most of the same shots could have been done using shadow puppetry.
2. CGI hasn't replaced everything. The video diary part showed that they used an animatronic goat for some scenes. Also, they showed a scene which used a life size torso puppet of the gypsy woman. Seeing this part brought hope and inspiration to me.

Hope some of this info is useful to someone. Or at least causes a smile or something. And if anyone else has seen the movie and has further insight, please join in.

To further your thought I actually watched the credits and it looked like they had 10 puppeteers for the movie alone I was very impressed.  I think they used them for many scenes such as when the cloth dances around and across the car.  I don't remember the whole movie but the cloth did stand out for me. 

Daryl H

As for CGI not being the end of puppets...
http://www.vanityfair.com/online/oscars/2009/10/where-the-wild-things-are-built-jim-hensons-creature-workshop.html
...I thought this would be of interest on here but this thread seemed as good as starting a new one...
Stephen

ok it mite be a stuped question but what is Drag Me To Hell

It is a movie. http://www.imdb.com/title/tt1127180/

This brings up a good question when trying to convince producers of the benefits of puppetry over computer graphics. I'm biased, of course, I think puppets rock and are the obvious choice, but I suppose they can't do everything that CGI can. On the other hand, CGI can be pricey, time consuming, and often looks fake.

I'm glad to see a director like Spike Jonze going the puppet route.

I think it's probably a loosing battle vs CGI for movies, it will look less fake as time goes by and as for cost, some of these puppets are worth hundreds of thousands of dollars to make!
I was recently in a stage show where we wore suits that made us look like giant (8 foot) tap dancing dresses, there was 8 of these costume/puppets, all with custom made harnesses. The initial cost was $16,000AU per dress, then the harnesses all had to be redesigned and remade at considerable cost. Once CGI realism catches up (and it will, just look at Goluum) it will also get to be a lot cheaper.
I think puppets will have a place in things that require interaction with live action as standins and also for visual design elements. It will become "quaint, quirky or organic" any number of eccentric fashion reasons to use a puppeteer. It's main place though will be in this kind of fusion of CGI and live action puppeteering, and of course live theatre!
I'm looking forward to seeing those suits run through the forest, having tap danced in a 16kg suit 8 times a week for 2 years I have a lot of respect for a performer who will run through the Australian bush wearing a perfomance suit that weighs so much!