Business Week (via Daring Fireball) is adding fuel to the rumors of Apple's iPhone 3.0 may not only be shooting video come WWDC, but editing and sharing as well:

I’ve spoken with a source that is familiar with Apple’s plans for the next iPhone, which may well be announced at Apple’s Worldwide Developers Conference in early June. Evidently, shooting video is as easy as it is with a Flip, the ingenious device made by Pure Digital (recently purchased by Cisco). Then there’s an iMovie app that lets you quickly save the sections you want, right there on the phone itself. There may also be support for MMS, so the clips can be shared wirelessly with friends. And because of the iPhone’s relatively large screen, your friends don’t have to schlep to your PC or their Facebook page to see that video of your kids or your safari. Just hand them your iPhone.

Questing -- will this only be available on the next generation iPhone or will current (and older) iPhones be so blessed, lower-quality camera and processors not withstanding?