Sensors used on faucets, trashcans, etc.

http://www.newark.com/jsp/displayProduct.jsp?sku=33C1109&CMP=KNC-G-SKU-Vishay&mckv=si1z4vqfy|pcrid|13938172701|plid|

These can be had for about $0.18 each but look at the external part$ count!  Just like some projects benefit from multiplexed LED outputs, I think these will need multiplexed input processing.  I am thinking like when they are placed all around the perimeter of a mobile robot.  But, how does one do that most effectively within the Hardware/Software Continuum of Design Choices?  Thanks for bringing this up - it stimulated my thinking.

Thank you, Billabott, but that device only works at a distance of 2mm (about 1/8 of an inch). I need to go from 100mm to 200mm (4" to 8") sensing range.

What else ya got?

Murata is the industry leader.  They have probably made a breakthrough of some type but are only selling it to manufacturers for now.  Maybe some day in the distant future you can buy the one you want at Radio Shack.  Here is a clue of their new  tech: http://www.computerworld.com/s/article/9231980/Tiny_sensor_allows_gesture_control_of_tablets_phones

One of the touchless faucets on Amazon.com used 4 AA batteries.  So that is 6 volts.  The only way I can think of is that it uses Fresnel lens.  One for the emitter(s) and one for the detector.  If you put an object at the intersection of the two beam paths then you can get an activation.  That is how the PIRs are able to detect motion in their field of view.   But you knew that, didn't you?

Moving up to: The Parallax Radio Frequency Identification (RFID) Read/Write Module provides a low-cost solution to read and write passive RFID transponder tags up to 3 inches away.

Next step up: Ultrasound echo range finder. 

http://www.amazon.com/Virtuabotix-Ultrasonic-Distance-Rangefinder-Detection/dp/B0066X9V5K/ref=sr_1_2?ie=UTF8&qid=1357218870&sr=8-2&keywords=arduino+range+finder

You could also use a PIR sensor, but I don't think that it would perform as well as Bill's solution.

The IR LED and phototransitor is pretty much standard for these devices.

You could also play with capacitive sensing, but I am not sure how reliable it would be given the difference in each persons electric charge levels.

Just my opinion,

DAB

Have you looked at Cypress PSoC-based capacitive sensing? Depending on the geometry of your objects, you should be able to detect capacitive disturbances (caused by a hand coming into the sensor range) out to a few inches.