It's not quite artificial life, but it's certainly a step in that direction. As a "proof of concept" for work on artificial hearts and muscle systems, a group of researchers at Caltech (and Harvard) have created what they call a "Medusoid" -- a kind of synthetic jellyfish made of silicone rubber and cultured muscle cells. PhysOrg has the story, including video of the Medusoid swimming around.
Reactions, predictably, are heavy on the "It's ALIVE!" Frankenstein mad doctor electrical zapping hoo-ha. But the real story is that this thing works. It's not very far removed from something that could be implanted in your chest if your heart stops doing its job.
Though if the medical applications don't pan out, this would still be a hell of a fun thing to keep in your aquarium.