The launch of the iPhone OS 4 gave developers full access to picture and video capture data. This would mean that we would see new applications that utilise the camera of the Apple iPhone once the iPhone OS 4 is released.
The iPhone OS 4 SDK (Software Development Kit) mentioned that the iPhone will be able to record videos in higher resolution other than the current 640*480. Two presets were mentioned as options selectable for the resolution at which videos would be recorded.
The 1280*720p would confirm that the iPhone has HD video recording and hence the name speculation. Apple is rumoured to unveil the new “iPhone HD” in San Francisco between June 7-11.