This was news to me as well. I guess Ultimarc now sells interfaces for
both types of rotary joysticks:
http://www.ultimarc.com//rotary.html (for mechanical rotary joysticks, Ikari Warriors-type)
http://www.ultimarc.com/optipac1.html (for optical rotary joysticks, Caliber .50-type)
For rotary joystick newbs, the first link is for the kind of stick on nearly every rotary joystick game, and while it is really not good for anything else, that is the way to get the most authentic gameplay for those games.
The second link is for special sticks originally found on (I think) only 3 games, but those sticks can be used to play most (all?) of the games the mechanical rotary sticks are used on, albeit with a slightly different feel than the "correct" sticks. The OptiPac can
also be used to control spinners, trackballs, 360 degree steering wheels, 720 joysticks, and Roadblasters steering controllers.
A list of rotary games and more can be found here:
http://wiki.arcadecontrols.com/wiki/Joysticks#Rotary_Joysticks