Are you kidding?
Of course, the camera has to be on the side of the display, if you want to do video conferencing. Otherwise you would need a mirror or you would have to turn your phone all the time.
I would think iChat video conferencing will be available as soon as the phone has a camera (on the display side) and 3G. My Sony Ericsson phone (V600) can do video conferencing and I tried it with a colleague. It's nice to have feature not more though.
[UPDATE]One thing I forgot to mention: The phone needs a speaker or you have to wear a head-set. Otherwise you won't hear what your opponent says. That's the problem most mobile phones with video conferencing have.[/UPDATE]