iPhone OS 4: iTunes streaming audio
I mentioned this during the iPhone live! #100 podcast, but iPhone OS 4 has taken a huge leap forward when it comes to streaming audio via the iTunes app. Since iPhone OS 2.2 you've been able to tap the title of a podcast to begin streaming (rather than downloading) the audio, even in the background while using other apps, but it was sometimes hit or miss. It would drop out, it would time out, you couldn't really scrub through it, and if you left it for a while it would lose its place and start over.
In iPhone OS 4 it's rock solid. You can scrub and it re-buffers and keeps playing flawlessly. You can stop it and come back hours or even days later -- even after using the iTunes app to search for other things or the iPod app to play different audio -- and it still knows where you left off and starts playing again instantly without missing a beat.
It's so good you may find you no longer download or sync podcasts but just stream what you want to listen to. (If they let you "subscribe" and receive notifications of when a new podcast appeared in the feed, it would be perfect).
Maybe this is architecturally laying the underpinnings for a grander Apple streaming service, or maybe they just wanted this app to work great for this functionality. Either way, iTunes streaming audio in iPhone OS 4 is a significant improvement.