Thorstein's Marble

The dwarf took this bit of marble from his purse and with it a steel point. The marble was triangular in shape, white in the centre and one of the sides was red, with a yellow ring around it.
The dwarf said, 'If you prick the white part with the point, a hail-storm will come, so fierce no one will be able to face it. When you want to thaw out the snow, you only have to prick the yellow part and the sun will shine and melt it away. But when you prick the red part, fire and flames and a shower of sparks will come flying out that no one will be able to bear. Besides that, you can hit anything you aim at with the point and the marble, and they'll both come back into your hands when you call for them.'

- Thorstein Mansion-Might, (Anon.,14th century AD)

Well, so I don't really need to expand on this quote at all for it to be clear that this is an awesome magic item. But there are two things to take away from this as general principles of magic item design:

1. There are very specific ways to activate the item's powers, which are tied into the physical properties of the artefact. This instantly makes it much more interesting than just "control weather 1/day, burning hands 1/hour, +5 bonus to hit". It's also more gameable because, for example, the item requires two hands to activate, and requires you not to lose the needle. Now, you can summon the needle or the marble back to your hands, but only if you can speak... thus, there are weaknesses to be protected if you own the item, or exploited if your enemy has it.

AD&D had some things like this, with trigger words to activate magic items, playing music on Heward's Mystical Organ, etc. However, it does open the gateway to DM dickery where the players have to fumble around for ages to work out what a magic item does (or worse, discard it without realising that it's magical). This could be mostly remedied by making sure that Identify spells/sages/skills/whatever are affordable and comprehensive.

2. The marble has a lot of different powers - three separate spells and one combat function. In AD&D terms, it's reaching the border between Magic Item and Artifact. I think it's possibly more flavourful to have a bunch of powers tied up in one item, and it could reduce the dreaded 'Christmas tree effect'. The only problem would be if this made magic items proportionally rarer, so the PCs might spend ages searching for even one worthwhile item, and then whoever gets to use the item will be much more powerful than everyone else.

Grim the Good, Sapient Mead-Horn

'He'll have his great drinking horn brought into the hall, called Grim the Good, a magnificent treasure, ornamented with gold, and with magical powers. There's a man's head on the narrow point, with flesh and a mouth, and it can talk to people and tell them what the future holds for them and warn them when there's trouble ahead. It will be the death of us all if the king finds out that we've a Christian with us. We'll have to be very generous to Grim.'

- Thorstein Mansion-Might, (Anon., 14th century AD)

Grim the Good is an enormous drinking horn, taller than a man, owned by the giant king Geirrod. It has a face that speaks and predicts the future, making it a potent tool for Geirrod to ensure his safety and power. However, Grim is somewhat capricious and open to being flattered by others. Some men give gifts to Grim in order to gain his allegiance, but the greatest honour one can do to Grim is to empty him of mead in one draft. So far, none but King Geirrod have managed to do this.

The Ball Dripping Fat Seal's Head Game

'Go and fetch my gold ball, and bring it here,' he told them.
Off they went, and came back with a seal's head weighing two hundred pounds. It was red-hot, with sparks flashing from it like a forge-fire and fat dripping from it like burning tar.
The king said 'Take the ball now and throw it to each other. Anyone who drops it will be made an outlaw and forfeit all his property: and anyone afraid to throw the ball will be thought a coward.'

- Thorstein Mansion-Might, (Anon., 14th century AD)

It is said the giants of the north play a ball game with the burning head of an enormous seal. The game is to throw the ball from one team to the other, and the fun is in the damage it inflicts upon those who catch it. Usually, burnt skin and singed beards are the only dangers, but broken bones and even fatalities are not unheard of. The reward for playing the game is to receive the property of the outlawed cowards who drop the ball.

Humans cannot normally play in this game; the burning ball will tear through their weak bodies like a knife through butter. However, it is the only way for an outsider to gain prestige in the giant's court; thus, several travellers have come up with their own schemes to play the ball-game passably well despite their natural handicaps.

(Thorstein Mansion-Might is full of surreal non-sequiturs like this. Plot threads arise suddenly and then vanish without a trace. Characters die and come back to life, or act for wholly incomprehensible reasons. All the sagas have the feel of oral literature, of being recited out loud by someone, but only Thorstein Mansion-Might has the feel of being recited by someone who is really drunk.)