Six degree of freedom (x, y, z, azimuth, elevation, and roll) are hard and expensive to come by these days. Stuff like the Wii remote, iPhone, and Droid only track rotations, not fine position (yes the GPS will find you within +- 10 meters, but I’m talking about millimeters here!) Magnetic tracking schemes dominate the 6DOF market, and the leaders after 20+ years still remain Polhemus and Ascension Technology. These magnetic systems have a set of transmitter coils which create oriented magnetic fields. One or more sugar cube sized receivers use three coils to read these magnetic fields and use that information to quickly and accurately determine the receiver position and orientation.
A brief video demonstrates the Ascension SpacePad, shows all the individual components, tears down a transmitter coil, and walks you through programming the whole system on your PC: