It’s mentioned briefly in Apple’s promotional video about the design of the iPhone 4, but they’re using a new production process that effectively fuses the LCD and touchscreen — there is no longer any air between the two. One result of this is that the iPhone 4 should be impervious to this dust-under-the-glass issue. More importantly, though, is that it looks better. The effect is that the pixels appear to be painted on the surface of the phone; instead of looking at pixels under glass, it like looking at pixels on glass. Combined with the incredibly high pixel density, the overall effect is like “live print”.
The fusing he is talking about is very welcome – I have had one spec of dust stuck in my screen for the past two months and it drives me crazy.