What you are hearing is not a theremin. It is Paul Tanner's "electro-theremin" (sometimes called the "tannerin"). This is the instrument that was used by the Beach Boys in their 1966 hit song GOOD VIBRATIONS. It more or less replaced the theremin for studio work in the 60's and 70's because it is not gestural (it is essentially a ribbon control electronic pitch bend device similar to the "ribbon" of an ondes Martenot) so it is easier to play on pitch than a theremin. It lacks, however, the subtlety and expressiveness of a theremin.
Wikipedia gives a good description of this instrument.
Tannerin (http://en.wikipedia.org/wiki/Electro-Theremin)
