Google's just launched Lively is a 3-D simulation application where users can customize avatars and create environments (rooms) with stuff they pick from a product catalog. The environments can also be embedded in blogs or web sites.
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Related:
Lively - Welcome
Lively: Google Launches Virtual World - ReadWriteWeb
Google ventures into virtual reality with 'Lively' - Yahoo! News
Google creates Lively virtual reality that will rival Second Life | Mail Online
Google Gives Virtual Reality a Second Life
Google Lively: 3D Interactive Virtual World
Google Lively: Comprehensive Guide to Getting Started [SearchEngineWatch]
Google Lively: First Impressions - Advertising Lab: future of advertising and advertising technology
Official Google Blog: Be who you want on the web pages you visit