The peg-legged pirate is perhaps the earliest vision of a prosthetic limb. In recent years, however, the advances in prosthetics, from the materials to the functionality, have leapt forward astronomically. Some of the best advances either come directly from the military or through military funded projects, such as this Johns Hopkins multi-disciplinary effort to create multi-functional upper limbs which have neural sensors so that a person 'thinking' can direct prosthetic movements (DARPA funded).
However, as with all things military (in spite of this ridiculous Navy propaganda - 'a global force for good'!), the embrology of this interest in limb prosthetic research comes from a viscious carnage: "For every 30 service members returning from Operation Iraqi Freedom and Operation Enduring Freedom, one is an amputee. Just since Jan. 1, 1,421 amputees have returned." Unfortunately, te rest of the world doesn't have a half-trillion dollars at its disposal to advance the care of its amputees, even though road traffic accidents could be the third-leading cause of global disease burden by 2020.
And so, while many advances in prosthetics happen outside the military world (see this fantastic engadget compilation), it is quite instructive to see where the trends in prosthetics are going in the military world. On the materials side, the trend obviously is to lighter and more durable limbs. In the developing world, lack of quality materials frequently degradeds limbs withing 1-2 years, necessitating frequent replacements. On the functionality side, newer prosthetics have accelerometer sensers and actuators which replicate the natural boost of foot-ankle stepping so that wearers don't have to work extra for normal movements. And, as described above, the future control of these limbs may be through neuronal implants which allow the mind to 'direct' the prostheses.
As with many of these posts on military medicine, this is again an applause to the accomplishments of the military scientists and a call for them to widely disseminate the knowledge for the benefit of everyone else.