The Blender Tutor shows how you can cut up any model using a cloth simulation.

Check out this new tutorial from the Blender Tutor Thomas Latvys that shows how you can slice up any object using the knife tool in Blender. The tutorial then uses Cloth Simulation in Blender to make all the pieces fall apart.

Cloth is an excellent tool for creating dynamics but also using dynamics to make models. Have a look at this other tutorial by Santiago Pereira (Sanctus) that shows how to use cloth dynamics to create picture-perfect pillows and cushions.