When you shake the iPhone 3GS three times you activate "monacle". A mode in which the iPhone's camera is used to show you the world in front of you, overlaid with local businesses and their ratings. This is all possible thanks to the GPS and compass built into the iPhone 3GS.
But yesterday's update brings an easter egg into the mix that takes it to whole new level; into the realm of augmented reality.
The service is an easter egg and therefore feels a little half baked, and is probably the reason that it isn't a full-blown feature yet. It's a great first step, and I expect the next version will have all the bugs ironed out.
Here's a video of it in action from an associate editor at Mashable who's apparently skipping Grade 10 Algebra to film this demonstration.