Hi Sandman,
Don't forget that there's a difference between audio signals and midi-signals.  there to completely different things.  Most sequenser do support audio, but the approach is completely different than midi sequensing itself.
But today it is possible to transform audio signals like a guitar to midi signals.  There are complete midi-guitars (parker has one), but you can also put a special device next to your pick-ups to transform it to midi.  The problems are off course: quite expensive, and also in the lower frequenties you can have phase problems...
greetings!
Brett