Ibcyalater,
They are both hardware and software. The hardware consists of a mouse like object that sits on the monitor screen and the software uses it to measure a raft of different parameters. An ICC profile is automatically created to correct any errors found. It needs redoing about once a month as monitors suffer from something called "drift"!
The cheapest option is probably the Huey Pantone. Its for sale here in the UK from prices ranging from £49 to £99.
I use an Eye1 Display2, which is very well reviewed and is very popular. It is on sale here in the UK for around £125 plus VAT (£143.75).
There are loads of different calibration devices on the market, all at different prices and offering slightly different options. "You pays your money and you takes your pick". One interesting new concept is the ColorMunki, it not only calibrates the monitor, but the printer as well. It does have shortcomings however, whether these are important to you, only you can decide.