Geothermal heat pumps aren't new but are certainly getting more attention of late. The theory behind geothermal heat pumps lies in the fact that ground temperatures below the frost line and well water temperatures are relatively consistent throughout the year. Depending on location, these temperatures range from a nearly consistent 45 degrees in northern areas to a nearly consistent 75 degrees in southern areas. This relatively cool, relatively stable temperatures are the source for the heat pump.
Ground source heat pumps rely on the stable temperature of the earth below the frost line. With ground source heat pumps, pipes are buried in a zig-zag pattern blow the frost line. These pipes are filled with a heat transfer liquid. A pump circulates the liquid through the pipes where they are exposed to the cool earth. This naturally cools the liquid. Next a fan blows across a heat exchanger inside the house to blow the cool air inside. This adds heat to the liquid so again it goes outside to cool down in a closed loop. This is the principal behind ground source cooling.
Another variation is well source or water source cooling. In this instance water is pumped out of an underground water well. The cool water is pumped through an indoor heat exchanger and used to cool the air. The water is warmer but is still pure and clean. It hasn't come in contact with any contaminants so it can be sent back underground into the well. This way water isn't "consumed" and wasted. It is recycled taking the cool water from the well and returning warmer water.
In any form geothermal heat pumps aren't cheap. The installation cost can easily exceed 2 times a standard heat pump but electricity savings can be substantial. Still, look for a 3-5 year payback in initial investment.