Oooooo! Things just got interesting.  Coming next week iOS4.1 will bring bug fixes and performance improvements for the iPhone 3G, game centre finally makes an appearance…plus…in camera HDR…on your iPhone! (or the new ipod touch).  According to Jobs it takes three exposures in quick succession – one over exposed, one under and one in the middle – as you would on a normal camera.  It then puts them all together for you, whilst retaining the three originals in case you want to keep them.

HDR is still quite divisive…mainly because in the wrong hands the results can be hideous, but in the right hands it can be sublime.  It’ll be interesting to see how well it works on the iPhone and what the potential fallout is likely to be.  Could we finally start to see in-camera HDR on DSLR bodies??  If you can do HDR on a phone, camera bodies are going to have to start trying to compete.  Why buy a point & shoot camera if your iPod Touch can take more visually appealing images without having to worry about blown highlights or dark shadows?  Likewise at the consumer end of the DSLR market – consumers may start to expect these features.

One thing that will be interesting to see is how well it copes with movement between the three exposures.  How quickly does it take the shots?  Without a tripod mount (yes, I know you can get after-market ones now), movement between exposures is inevitable.

Well, we’ll find out next week won’t we.  In the meantime, Apple Insider have put up a “first look” article with a few sample shots.