This thread actually got me into buying and building this current setup.
Cost: Webcame (Ebay) - $20
LEDs and resistors - $6-7
Battery: $4 for Lithium, $.85 for an Alkaline
Everything else was scavenged.
Items Used:
1 x Baseball cap
1 x Metal Coat Hanger
1 x Lithium 9v (you can use Alkaline)
1 x On/Off Dip Switch (from a hair dryer)
2 x 100 ohm 1/8 watt resistors
3 x 1.2v IR LEDs
2 x 30" of wire
Tape
Solder & Soldering Iron
Velcro
1 x Microsoft VX-1000 Webcam
1 x Floppy disk (used to replace the removed IR Filter on the Webcam - blocks out visible light) - see website for details on this
So far, works like a charm. I do not take an FPS hit in game on my E6400, 4gb RAM, and an 8800GTS 640mb. A few bugs with the software and webcam. If the webcame power LED is on and I open Free-Track, the program will crash right away one I hit 'Start' on the program, just have to unplug the webcam and plug it back in to fix this. I get a little jittering with tracking my head movement sometimes, I'll have to play with the sensitivity of Free-Track and possibly reposition the LEDs a tad.
A 3 point cap setup. The frame is made out of the coat hanger. Used a little Solder to hold it together.

Lithium 9V power supply. A ON/OFF switch from a hair dryer. A resistors in-line on the positive cable.

Probably the weakest point of the design, the LEDs are held in place by a double sided tape and packing tape.

Microsoft VX-1000 Webcam mounted upside down on my desk, right about the monitor.

Flight Video in an ME163
http://www.youtube.com/watch?v=9pEOGeBMTDQ