The typical choice for a tool (the industry term for this is spindle) is a trim router (a Dewalt DWP611 is suggested).
Rotary spindles are the most frequent tool choices, but there are a number of other options.
Pen / Plotter Mounts
Mounting a pen is something of a rite of passage.
Rotary Spindle Options
- Dewalt has finer-grained speed control, Makita lower and higher range of possible speeds (the lower speeds are especially useful on plastics and wood)
- Dewalt has multiple precision collet options (standard ones as well as the ER-style collets from Precise Bits), Makita has a single source for precision collets (albeit in a variety of sizes)
- Dewalt has lights, the Makita does not
- Dewalt has a plastic button on the Body, which limits Z plane positioning inside the mount, Makita has a more Robust Tool changing mechanism, with a cylinder push lock below the shaft, which will allow more mounting options in the Z plane
- Makita bearings easier to change
- Makita brush life longer and replacements less expensive and easier to change
Note that spindles may be upgraded w/ better collets. Some are merely replacements for the standard collets in different sizes, while at least one manufacturer offers specialized systems which allow one to use ER style collets. These are more convenient and easier to change (esp. if one buys a matching nut for each collet) and afford a greater clamping tolerance (e.g., a 1/4" collet can hold a 6mm endmill).
http://www.cnccat.gr/?lang=en --- commercial option for Kress spindles --- c.f., http://www.cnccat.gr/index.php?id=1&catid=89&lang=en
Similar to a rotary spindle is a high-speed engraving tool:
Mounting a laser for engraving and cutting is a popular upgrade. While it does have a number of safety implications, it affords options which aren't feasible otherwise.
- 3D printed SO3 Drag Knife
- Cricut Cutter Add-on
- plotted vinyl
- vinyl_knife_holder.dxf cchristianson's Google drive
- Re: Vinyl Cutting Blade
- Silhouette craft cutter: GPGL Reference, Courtesy of Graphtec 
- CNCZone: Drag Knife for CNC [Pics+Video]
- http://donektools.com/ --- notable for having a variety of high-quality designs, each w/ different characteristics, as well as a variety of support software on their site
Discussion of path needed for compensation: http://www.cnczone.com/forums/coding/71521-cnc.html c.f., Drag_Knife_Support on the CAM page.
c.f., Tangential knife.
- Google+ pic & post
- Aliexpress: Foam cutting wand
- Thingiverse: 3D Printed holder
- MPCNC 2826 Brushless RC Motor Foam Cutter
This link suggests it should be spring-loaded: http://www.mytoolstore.com.au/products/Wood-burning-Pen-for-CNC-Machines.html
Pick and Place
- First test of my ShapeOko pick and place prototype
- Shapeoko and Pick and Place
Further discussion and note that height control is needed: http://www.shapeoko.com/forum/viewtopic.php?f=24&t=7232&p=61187#p61187