I think the iPhone is missing one key feature that if added would open the door to multiple new and interesting applications. Have I got your attention? I think its missing a second video camera facing the user.
Naturally a second video camera opens the door to video conferncing, think iChat for the iPhone. This is a big wow application and but I believe that much more that can be achieved.
A video camera on the front of the phone would open the door to motion or gesture detection. I believe is truly where new applications for the mobile phone will be developed. Some Nokia phones have a second video camera and you can see already some far out applications being developed.
Below is a video of an application that can be downloaded from the Ovi store called eyeCall. This application allows users to silence the mobile phone when there is an incoming call by simply making a wave gesture before the video camera or send out a text reply by holding your hand over the phone for more then 3 seconds. Cool, eh?