When the iPhone first released, one of the gripes was the lack of video output. With the firmware update 1.1.1, Apple seems to have included video output, albeit with their proprietary cables.
Above you can see an (unhacked, 1.1.1 firmware-d) iPhone asking if the video playback should display on a TV. This iPhone is hooked up, via component cables to a TV directly from the iPhone itself; connecting via the dock does not work. The dock mishap is being fixed by Apple and will eventually be functional.
Whilst the video is playing on your TV, you can see a preview of what you’re watching plus playback controls right on the iPhone; a handy feature. This feature is great for those who keep lots of their video library on their iPhone and don’t want to be semi-squinting at a 3.5 inch screen all day.
The Apple proprietary component cables will run you $50, so watch out.