We had a cable with 25 RGB pixels (WS2801 driven) that we folded into a 5x5 matrix. The leds are powered by an external power supply (5V/3A) and controlled with an Arduino using the WS2801 SPI library by Blip. (There are several libraries supporting WS2801 available, we just went for the first google hit.)
You can watch this short video of a linear rainbow color cycle running on it.










