What they can do now is either build best of breed into or licence the design of the best solution and integrate it themselves.
There will be significant power savings, certainly ~50% of processor usage and perhaps 30% overall reduction. This is not only due to the reduced chip headcount, but also due to PA Semi's experience in power management being applied in sync with Apple's power requirements. As opposed to how a 3rd party views how power management should be handled.
The space savings not only would be useful for cramming more flash memory in, but more battery. I estimate next year's model will have one new nice feature and double the battery life. I also bet they will use the same chip in both the ipod touch and iphone. I also am fairly certain they will continue to only increase memory as its available to Apple for an equivalent price (otherwise, they would be selling a $500 phone under contract)