A demo posted to YouTube last week (embedded below) shows off features that include offline playlists: you can store up to 3,333 songs in offline mode, making it ideal for listening to your music on the plane. The core selling point, however, remains the same as the desktop app: on demand access to 6 million+ tracks. Another neat feature: it syncs with the desktop via wifi...no need to hook up your USB cable. Even US reviewers are blown away: Wired's Epicenter blog claims it's so good that "you’d have to pry it out of my cold, dead iPhone before I’ll delete it from my phone".
The app will only be available to those with paid Spotify accounts: with Spotify only available in Europe right now (although launching in the US very soon), that means we'll get it first.
There's a major catch, however: Spotify is essentially an iTunes rival, and a very good one at that. If Apple wanted to kill off the competition, rejecting Spotify from the App Store would be one way to do it.