Rumors are pointing towards Apple adding a voice recognition and voice synthesis feature in to the iPhone 3.0 Firmware.

The voice synthesis feature would mimic the 3rd generation iPod Shuffle’s ability to name what song is currently playing. The application of this isn’t entirely known but could be used to speak names of launched Applications and the names of songs in the music library. One of the other features would be voice recognition running in the background which would enable hands free dialing and could be used in conjunction with mic equipped iPhone headphones for spoken commands of other system functions by pressing the play/pause button.

Via: iPhonestalk