Thank you very much for your response to my question. The device you suggested sounds exactly like what I've been looking for and it's quite affordable, too. Just two more quick questions if you don't mind:
+ Does the button turn "endlessly" in one direction or does it stop at some point?
+ How are your experiences regarding timing accuracy?
I've had nothing but good experiences with the Phidgets corporation: http://www.phidgets.com/
This rotary potentiometer is continuous and fairly cheap: http://www.phidgets.com/products.php?category=37&product_id=3583_0
One other great thing about Phidgets is that the control board you'll need for the potentiometer can be used with almost all their input/output devices. In essence, one control board purchase is all you'll need to able to collect multiple types of data is the need arises.