Finally, the iPhone 3GS digital compass is getting a workout. Software developer acrossair has submitted the first augmented reality application to the Apple AppStore for approval. The app is called Nearest Tube, and will help Londoners plan routes and find the closest underground station. What's unique about this process is how the app delivers information.

Instead of a static map, Nearest Tube displays subway information in real-time, overlaid in 3D on top of live video of the user's surroundings. Holding the iPhone 3GS horizontal will show arrows pointing to different train stops, and tilting the device upwards will overlay signs in the direction of different stops. These signs look like a heads-up-display, and give more information about how far away the station is and what lines connect there.

iPhone OS 3.1 beta versions have already been seeded to developers, meaning an update for the general public is imminent. Apple released iPhone OS version 2.1 only a month after 2.0 was made available last year.

The iPhone 3GS hit store shelves on June 19th running iPhone OS 3.0, and reports have indicated that millions of iPhone 3G and original iPhone owners have already upgraded their operating system. The new version includes 46 security fixes and new features such as copy and paste. So will it be worth upgrading again so soon?

Did you know that 80% of all iPhone failures are due to accidents? The problem is that most mobile carriers will not cover a smartphone like the Apple iPhone under typical insurance contracts.

SquareTrade, a licensed insurance provider, offers the only iPhone protection that fully covers accidents from handling. The company has been in business since 1999 and has sold over one million iPhone warranties.

According to SquareTrade, "drops, spills, water damage, battery failures or any other failures from normal use or accidental damage" are all covered under their plans. This is the key difference between SquareTrade's insurance and other coverage options such as AppleCare.

Don't Drop That iPhone

Your iPhone comes with 90 days of technical support and a one year warranty from Apple, and many users have extended this coverage to two years with AppleCare. Unfortunately, if your iPhone is dropped and damaged or accidentally gets wet, Apple will not cover the repair.

AT&T does not currently allow tethering on the iPhone even though Apple's iPhone OS 3.0 includes the feature. The company is still deciding what a tethering data plan for iPhone would cost and how it would be structured.

Tired of waiting? If you have an iPhone 3G or 3GS running OS 3.0 and a computer running iTunes 8.2 on Mac OS X here's how to activate tethering. You will be able to connect your computer to the AT&T data network using USB or Bluetooth via your iPhone.

This September, PhoneSuit plans to release its MiLi Pro portable video projector for the iPhone and iPod Touch. The entire device folds up and has its own speakers and swappable battery.

The iPhone or iPod Touch docks directly into the accessory. There's also a VGA or RCA input on the side of the miniature projector, allowing it to be used with a computer or DVD player, etc.