I've seen them. The prizes are usually pretty beefy, iPods, PSP and the like. The strings are pretty tough and the razor blade is very likely dull. More often than not it takes several tries to release the prize. If you're lucky, you'll find one with a prize down to the tiniest string reducing your investment to a puppet of dollars.
I don't know who makes them but they are still new so they're probably still pricey.