Next-generation iPhones likely to focus on internal improvements.
'iTunes Match' Allows Both Streaming and Downloading of Music
iTunes Match stores your complete music library in iCloud, allowing you to enjoy your collection anywhere, anytime, on any iPhone, iPad, iPod touch, or computer.Insanely Great Mac provides this nice walkthrough video which shows you how the service works. It also shows that this is both a streaming and downloading service.
For the $25 yearly fee, iTunes Match will scan your existing iTunes music library and allow you to access it from any of your iTunes-linked Macs or iOS devices. Songs that already exist in Apple's iTunes music store will be streamed straight from Apple's master copy (at 256kbps bitrate) without a need to upload the songs yourself. Songs that don't exist in iTunes will be uploaded to iCloud. Either way, all your music (up to 25,000 songs) will be accessible from your various computers and iOS devices.
What wasn't clear before is the fact that music can be either streamed or downloaded locally to any of your computers or devices. While the video only shows the service on a Mac, we've confirmed it works the same way on iOS devices. So, essentially, you will have instant access to your entire music library from all of your Macs, iPhones, iPads, or iPod touches for only $25/year. This ability on your iOS devices means your music library won't need to take up valuable space on the device itself, as long as you have some sort of internet connection.
iTunes Match is expected to launch alongside iOS 5 this fall.
Update: Insanely Great Mac has now posted a video showing how it works on an iOS device: