The iPhone G4 will feature a 5 megapixel camera with a backside-illuminated sensor, which Jobs says increases the amount of light captured by the sensor, resulting in better photographs, particularly in low-light situations.

The camera will also record HD video at 720p resolution and 30 frames per second, and the LED flash can be used to light video as well. Like the iPhone 3GS, the iPhone G4 will feature in-phone video editing and enable users to share video the the Internet (think Facebook and YouTube).

However, Apple is pushing the video editing envelope with a new iMovie application for iPhone, that enables users to assemble and trim clips and record directly into an iMovie timeline.

Users can also add camera photos to their movies (complete with the pan-and-scan Ken Burns effect),and iMovie for iPhone will enable users to add titles and transitions to their videos.

The iPhone G4 camera embeds geolocation information in video; iMovie for iPhone can optional display display that information Users can also add music as a soundtrack to their video, and select from a number of pre-generated themes. iMovie for iPhone will be available as a separate purchase from the App Store for $4.99.