I super glued 2 neodymium magnets onto the flywheel and used another neo magnet in a small container and wrapped 2 thousands turns of fine enamelled wire.
The flywheel magnet passes the coils and causes the magnet inside to 'flip' very quickly and induces a current.

Approx 5 volts, 20 mA, ideal for LEDs, it needs a good heat source though to keep the engine spinning.
Image here of coils
http://www.otherpower.com/images/scimages/6863/Gotwind_St... (less info)