It seems iOS 5 is full of hidden "gems" (aka features Apple didn't deem worthy of making publicly available yet), like the earlier panorama camera stitching feature. This time, hacker Sonny Dickson found an Android-like word suggestion bar tucked away in iOS 5. Personally I'm not a huge fan of these, but some people feel it speeds up typing and is helpful. I think it takes up too much real estate and looks clunky.
There are instructions on how to enable