Just because Apple have not released a “video” application with their Software 2.0 doesn’t mean that the iPhone can’t do video.
Several jailbroken apps have been found to be able to video. So all they have to do is write it for the SDK. It should, in theory, be easier to write on the SDK because of knowing all the correct APIs.
Just to back this up:
Monster, in fact, says
I am currently building the this and all my apps to Apple iPhone SDK specs and will be available on all non jailbroken phones. Because of the legalities i cannot discuss SDK details or answer any information that isn’t publicly available regarding Apple iPhone SDK.
So, as you can see. The iPhone can do video. And because Apple supports competition, they aren’t just locking out all these developers.
So can we please get our story straight now?