Sharpie's Liquid Pencil is sort of a hybrid between pen and pencil. That said, it can be kind of hard to wrap one's head around Sharpie's new creation, at least until you pick one up.
Although it looks like and writes like a pen, it uses liquid graphite and erases much like a pencil. It writes smoothly, doesn't break or need new lead and it is even less smudge-producing than a standard pencil and far less smear-prone than any pen.
Its erasability varies based on a bunch of factors from the type of paper to how hard you press. In general though, it erases quite well soon after writing, which tends to be the only time I would want to erase anything anyway. It's supposed to get more permanent after the first 24 hours, but will remain somewhat erasable long after that.
For more on this story, read Hands-on with Sharpie's Liquid Pencil on CNET News.