It makes terrific reading: how an Apple employee lost a prototype of the next generation iPhone, who found it, and what they found inside. It’s all at Gizmodo.com.
In case you are wondering, here’s what’s on the prototype, according to one of the Gizmodo articles:
• Front-facing video chat camera
• Improved regular back-camera (the lens is quite noticeably larger than the iPhone 3GS)
• Camera flash
• Micro-SIM instead of standard SIM (like the iPad)
• Improved display. It’s unclear if it’s the 960×640 display thrown around before—it certainly looks like it, with the "Connect to iTunes" screen displaying much higher resolution than on a 3GS.
• What looks to be a secondary mic for noise cancellation, at the top, next to the headphone jack
• Split buttons for volume
• Power, mute, and volume buttons are all metallic