Maybe my timeline is accelerated to believe this will happen this year, but the future of the iPhone, IMHO, is:
1. ARM Cortex A8 or A9(future 2-core?) CPU (custom built by PA Semi?). The performance/power ratio of the Cortex series will allow a large increase in performance to the platform without a huge hit on battery life.
2. Imagination Technologies PowerVR SGX and VXD graphics co-processors will allow even more powerful graphics and support low power native playback of HD video. Sure, the HD video wouldn't be HD on the iPhone screen, but it could support HD video out to a TV/monitor. The endgame here is the necessity of only 1 HD version of a video in iTunes, regardless of what device it's going to be played on. This consolidation may be years out, when storage and video processing/scaling is cheap and efficient enough to roll out across the entire iPod line, but it will come some day.
3. iPhone OS 3.0 (aka Snow Leopard for the iPhone). The performance enhancement focus of Snow Leopard combined with Grand Central is a perfect fit for power and performance optimizations on the iPhone. The 3.0 firmware will elegantly open up even more performance by optimizing CPU/GPU usage across applications. Which leads me to my next point:
4. Background Applications. The increase in CPU/GPU power, combined with the 3.0 firmware & Grand Central will allow Apple ample room to run background apps (assuming internal memory resources will be increased as well). I think Apples quietness on the 6 month delay of push notifications combined with the Palm Pre / G1 threats, which both run background apps, further the argument that Apple may be reversing course on this idea. I think background apps will be limited to the next gen iPhone only. Maybe they will release the push notification service in conjunction, which could be used by all legacy iPhones as well. This combination would allow the user to background apps like Pandora, while getting push notifications for apps like AIM, which don't really need to be open all the time.
5. Updated battery tech. Utilize all they learned creating the new updated MacBook Pro 17-inch battery and incorporate it into the iPhone for improved battery life.
6. Updated camera with possible additional front facing camera for iChat video conferencing (though I don't know how much of a market there really is for this). Video recording with easy uploads to YouTube/Facebook is a no brainer.
7. Copy & Paste, MMS, yadda, yadda....