Apple Insider reports that Gear Live has the iPhone 2.1 software in hand and note that Core Location can now recognize the cardinal direction of an iPhone with GPS. It can also detect velocity. Both of these are essential to providing turn-by-turn directions.
Insider also notes that Apple has implemented a rudimentary version of the background push notification service in the 2.1 update. This feature is going to be very valuable to applications like AIM that could use the service to make IMing much more user friendly on the iPhone.
Apple originally said that this service would become available in September of this year, so it is likely that we’ll see the iPhone 2.1 software update around that time.