It seems firmware 2.0 will bring a veritable boatload of upgrades and improvements to iPhones both current and imminently 3G and this latest feature is bound to be a crowd pleaser.
Lovingly named Chinese site wretch.cc has published shots of a prototype handwriting recognition system for the handset from what it claims is the latest beta version of firmware 2.0 to leak outside Cupertino.
The re-jigged interface shows an area approximately half the size of the screen where presumably a stylus can be used to draw out symbols with a best guess feature alongside it giving the user quick symbol shortcuts. A second input option is apparently also featured which lets users type the letters behind the sound for each symbol with a similar predication pane narrowing down the potential symbol(s) desired.
Interestingly no sign of any other language support was mentioned at this stage (perhaps not surprising given the source of the leak) but if Apple can master a system which works with the notoriously complex Far Eastern alphabet then recognising western scrawl should be a walk in the park...