NewTeeVee posted an overview of activity by Ustream and others for live video on the iPhone in Live Broadcasting From Your iPhone? There’s (Finally) an App for That.
Of course there's still no video chat, but Ustream's app is free and doesn't need to be jailbroken.
There's broader detail of live video for mobile devices in some earlier AEP overviews: Broadcasting live video from phone and Mobile video reporting increasingly important, Overview of live video over the internet, and Live video streaming tips + marketing.
Update: from NewTeeVee, "Following on the heels of similar announcements from Ustream and Bambuser, Qik’s application for live video streaming on the Apple iPhone has finally been approved...Ustream also enables live video streaming through 2G, 3G, and 3GS iPhones."