I live in "Europe" and I've never seen anyone watch TV on their phone before, despite it being free with most contracts. Also, no phone has a decent camera; even the Sony C905 (which is probably the best camera phone available in Europe) is mediocre as a camera, providing very noisy 8MP JPGs with horrible colors.
In a few years, a company is going to release a CCD that can shoot high-quality 720p video and decent-quality images and is small enough to fit in a phone. When this happens, I guarantee you that the iPhone will have it just like all other cameraphones.
I saw a guy a few weeks ago on an evening train in Tokyo watching a ballgame split-screen with his email app, where he was writing a reply. He sent the mail, and then the TV app went back to full-screen. I don't watch TV, but that was just amazingly cool.
A year ago or so at a mid-scale sushi restaurant some guys sitting nearby were watching the ballgame on their phone, though thankfully they had the sound off.
In a few years, a company is going to release a CCD that can shoot high-quality 720p video and decent-quality images and is small enough to fit in a phone. When this happens, I guarantee you that the iPhone will have it just like all other cameraphones.