News, suspiciously from Sony researchers, says Kids prefer robots to teddy bears. PR aside, the study did show how responsive interaction was key toward eliciting the child's attention and artificial affection. When the robot played with the child and responded to affectionate petting, the child's interest in the thing lasted much longer than when the robot tried to entertain noninteractively (through dancing).
You don't have to be David Freeman to figure out this has implications for designing an NPC (in games or other character-driven applications) to display artificial affection. If the simulated character wants to elicit the user's affection, it should respond to the user's affectionate actions. For an obvious example, a puppy in Nintendogs responds plausibly to rubbing its belly (with a stylus), petting its head, tossing it a ball, or shaking its hand. For a less obvious example, Yorda, in Ico, holds the avatar's hand, answers when called, and must sit beside the avatar at each save point. And if left behind too long, she is kidnapped ... whose consequence is game over.
Some cases come to mind where there may be room for improvement. Unlike the sterile environment of Civilization or SimCity, in Populous and Black & White, the followers worship the player. And in Black & White you can pet your god creature. But for me at least, the morphed creature's awkward ticklishness didn't elicit the kind of feeling I would have from a virtual pet. For a borderline counter-example, the Sims in Sims 2 while becoming hysterical when failing to take care of themselves, rarely respond directly to the user with affection. They show each other affection, and that in itself may invoke a bond, vicariously.
What other examples come to your mind? Or even better, how about some counter-examples?