iPhone App developer acrossair has a very cool augmented reality application for the iPhone 3GS ready to go live. They are waiting for Apple to approve it for the AppStore. Below you can see a video of the Nearest Tube app running on an iPhone 3GS. Augmented reality apps will be the next big thing for the iPhone. We already reported about Layar that is also hopefully coming to the iPhone soon.

This augmented reality app tells you where the nearest tube station is via the iPhones video function. Right now they implemented the app for the London tube system.

When you load the app, holding it flat, all 13 lines of the London underground are displayed in colored arrows. By tilting the phone upwards, you will see the nearest stations: what direction they are in relation to your location, how many kilometers and miles away they are and what tube lines they are on. If you continue to tilt the phone upwards, you will see stations further away, as stacked icons.

acrossair is seeking beta testers for other cities including San Francisco, Chicago, Washington, Paris, Berlin and Tokyo.
Via the acrossair site.