According to Mac Daddy World, a group of coders have managed to develop a video conferencing application for the iPhone that utlizes its Wi-Fi and built-in 2.0-megapixel camera. Click below for more pictures. First image in gallery.
They used the iPhone toolchain developed by the iPhone Dev Team wizards to create their app, so it runs natively on the iPhone, capturing video from the iPhone’s camera, compressing and sending the stream to a server. The server relays the feed to the other iPhone and vice versa