That's the infrared transmitter for the proximity sensor. It's the same thing if you hold a remote control to a camera and press a button. It's visible to the camera but not the human eye.
It does the same thing in a call, it's what detects your face to the phone.
I think that is the sensor that shuts off your screen when you place the device up to your ear. I placed a call on the phone and put a finger in front of that area and it shut down the screen. IR sensor? That is what it looks like on the photo booth screen. Big Brother?
Edit: Looks like Ken was responding at the same time. He beat me to the punch, and a lot more eloquent.