The new iPhone's compass will allow it to do a lot of interesting stuff. We're imagining there will be some excellent apps that allow you to make a 3D rendering or a Quicktime VR using the camera with GPS and compass. It will also help out in the driving applications, especially at low speeds where the GPS can't figure out which direction one is traveling in.
Here's a simple use of Google Streetview using the Android's compass. Via Appe 2.0. Another video below.
