Over at 1up there is a good article on the very first video games. A lovely addition are the hand concept sketches for Pong which are at the end of the article.
In 1967, a bold engineer with a vision led a small team to create the world’s first electronic games to use an ordinary television set as a medium. Wary of naysayers from within, the video mavericks sequestered themselves behind closed doors, and for good reason: They worked under the payroll of Sanders Associates, a giant Cold War defense contractor. As hippies on the streets of San Francisco stuck flowers in the barrels of guns, three men in snowy New Hampshire crafted the future of electronic entertainment deep in the heart of a commercial war machine. In May of 1967, the world’s first videogames — as we know them today — made their quiet, humble entrance into the world.