Next-generation iPhones likely to focus on internal improvements.
Augmented Reality Apps to Arrive with iPhone 3.1 Update
Apple told Acrossair, developer of the Nearest Tube train finder, that the app will be approved for distribution after Apple releases version 3.1 of the iPhone software, which the developer expects will land in early September.
The New York City version of this app is called Nearest Subway and is demoed in this video:
Augmented reality uses the device's GPS, camera and digital compass to overlay real-time data onto live video. Other possibilities include iPhone games as well as the Layar browser we've highlighted before. iPhone 3.1 has been seeded to early developers but the exact release date has not been revealed.