Did Steve even say the iPhone would have Flash? I could look back at the Keynote but I don't want to. If not, YouTube wouldn't work.
According to the David Pogue super iPhone FAQ JAVA was a no-go but Flash was debatable. It was at that point the SJ said something to the effect that the problem with YouTube was the quality and that what they needed to do was switch to H.264.
And that is what they did. AppleTV doesn't have Flash support, but Google is re-encoding everything to be H.264 which presumably the iPhone supports. So regardless of whether or not iPhone ships or gets Flash Support, presumably the iPhone will support the new YouTube.
When SJ announced YouTube for AppleTV my initial reaction was that the feature for AppleTV was just a side benefit of the work/convincing they did with Google for the iPhone to support YouTube. Because honestly, H.264 or not, YouTube will look extra sucky on your widescreen, however, it will just be its normal suckiness on the iPhone screen.
My guess is that they are just waiting for the re-encoding to finalize and when they ship YouTube support for AppleTV they will ship it for iPhone OR they will wait until August when presumably (according to SJ I believe) all YouTube content will be converted and then ship it for iPhone.
At this point I think some specialized YouTube portal for iPhone is all but guaranteed, but whether it is this "mystery app" (and whether there even is a mystery app) is of course up for debate.
I don't think there is GPS. In the keynote presentation (go to Apple.com, and click on "Watch iPhone Introduction and scrub to 46.00) Jobs pulled down a list of "locations" and told the Google Maps client that he was at Moscone, and then the Google Maps based all inquiries off of that information. There is no triangulation or GPS or whatever scheme people are wishing. You tell Google Maps where you are and it basis its decision off of that. Unless something drastically changed since the Keynote, that is the way iPhone 1st Gen is going to work IMHO.
I am an iPhone nut if you can't already tell.