TwitAround is a proposed iPhone 3GS application utilizes an augmented reality Twitter viewer that displays real-time tweets around your physical location.
Hold your iPhone at eye level and the iPhone camera, GPS, compass and accelerometer are utilized by the app to produce a video see-through effect allowing you to see where the tweet comes from and how far it is away.
The principle barrier to implementing AG apps on the iPhone is Apple, itself. Developers are currently unable to publish these apps to the app store because the iPhone SDK lacks public APIs for manipulating live video.
Amazing stuff, and just the tip of the iceberg as far as augmented reality goes. Just think of the implications for libraries, museums, health care, travel, games! There is an open letter to Apple re: AG, and several examples of how the technology might be implemented here.