Beautiful. Not only a useful idea, but one that is already in use and can be used with off-the-shelf products. I think this site ought to have a separate category or search code for idea of this kind.

Currently, they do have "Smart Boards" which are the equivalent of a large tablet PC. A projector sends the image to a special white board that you can use digital pens and erasers on. However you noted the Big $$$. I think that the digital camera idea is a good direction for saving money, however, you would need a pretty high quality digital camera.

Uploading the images to a website (even a secure website confidential discussions) is a great idea, especially for saving paper.

Actually, I just yesterday used the pretty low resolution digital camera on my phone to take a record of my whiteboard notes. The picture was grainy, but eminently usable.

For one whiteboard drawing which contained very small writing and detained drawings, I ended up also taking a set of landscape photos which ended up being very clear indeed. I am now convinced that even a cheap camera or one bundled with another device can be used to record whiteboard notes.

Students can use a camera to capture the drawing from the teacher in the classroom. That will benifits whom miss that class. Of course, they need permission from the teacher in advance.

Try http://mimio.com/meet/xi/

Actually this is a baked idea. You can get a infrared detector and a little infrared case for your pen and the detector will record everything you draw in digital format. The next step is to record things as they happen and syncronize sound with it. (Have a professor give his entire lecture without being present.) Here is a link:http://www.3m.com/meetingnetwork/products/product_guide_digital.html

This is a great simple idea

The next step is to convert the picture to a searchable document.This requires OCR and related technology to convert diagrams and drawings to symbols (e.g. Visio document)

Dekel

I can do you one better, (tho to have a final static image as an option wouldn't be bad) Anyway a movie file of the entire thought process would be even better, because soemtimes things even get erased. You can see an illustration of how this could work, with almost no dile space too, by visiting "www.groupboard.com" or www.artcluster.com and you can actually watch what was drawn that day, and even what was erased (thought you have to watch quick, because it'sin super fast forward. as it loads......it wouldn't have to be a "movie" file persay... because the data is just dots on a screen, with an indicator of what size and color. TO make a long story short, in the size of a text file, you could have a fully "playable" file with pause fast forward and rewind etc... viewable on any tiny application designed to decode it. That way you get to see and watch the entire though process.

We're already using this at our company. A 60 euro digital camera along with an ImageMagick script to clean up and comment with the datestamp from JPEG's EXIF info does the trick beautifully. Very easy to compound a set into a pdf or ps document too.

We already have the whiteboard (6'x3' costs around 300 euro); this solution is far cheaper than some of the things other comments have linked to.