The iPhone has always had video playback capabilities.  First, we were able to watch  video via the YouTube application and eventually plenty of other services services began to offer video streaming or downloads.  Eventually the 3GS came out, letting users record a video and then upload it, but never stream it live.  

That's finally changed for the better.  Ustream has gotten its application, Live Broadcaster approved which lets iPhone 3GS users stream live video to a live audience.  Whats great news about the app is that it works on 3G networks, so you can pretty much stream from places without Wifi connections, given AT&T's signal is good enough there.  From personal experience, AT&T's network handles crowded events like concerts and conferences terribly, so I wouldn't expect to be seeing live bootleg broadcasts from the next Madonna concert.  

There's several social networking features integrated into the application as well.  It allows users to notify their Twitter followers automatically once they start a new broadcast.  During that broadcast users can chat using Ustream's Social stream which integrates a live feed of Twitter messages.  Also, streaming automatically records video onto Ustream's servers, so once the recording is done, the app enables users to share the recorded video via Ustream, Twitter, Facebook and YouTube.  

There's a couple notes to take here.  This isn't Ustream's first application, the company also had an app that let users view Ustream channels on their iPhones, but only when on a Wifi connection.  The company also had an app that let users record video, then upload to Ustream, but never live broadcasts.  

Finally, although Ustream's new application is considered the first iPhone app to stream live video, that might be a slight misconception.  Last week, Knocking's Live Video application was approved on the iPhone which enables users to stream live video from phone to phone, even on older 3G models.  A couple key difference from Knocking and Ustream's app:  Knocking doesn't have audio, and Knocking does not stream to a live audience of potentially thousands, it only streams to the one phone you 'knocked' to stream on.  

Cheers for live video streaming on the iPhone, finally.