AEXT.NET, a blog focused on web design & development, is presenting a very detailed tutorial on creating bubbles effect (like Apple Dock) with CSS.
The tutorial includes two methods: CSS sprites (basic) & the image swapping (advanced) which will be generating the same visual output.
  The effect is very functional specially for list items where items are small in size & the user may have difficulty in pressing the desired one.
It is accomplished with pure CSS (can be improved further with JavaScript for a smoother effect) & compatible with all major browsers.

Website: http://aext.net/2009/11/bubble-effect-with-css/
Demo: http://aext.net/example/bubble-css/