Kleiner Perkins Caufield & Byers (KPCB) announced a $100 million venture capital fund in March, "iFund," to fuel the development of iPhone apps. One of those funded apps, Pelago's Whrrl software, will integrate the iPhone's mapping capabilities with information about local places and even the location of friends, according to Business Week on Tuesday. Pelago is hoping it'll be one of the showcase apps during Mr. Jobs' keynote at WWDC.

Whrrl allows the iPhone user to hit a button: "What's going on around me right now." It could be a lunch special at an Italian restaurant. Or it could be a friend just came within range.

Whrrl is one of the killer apps that may defy the odds when it comes to successful smartphone apps. Creating those has always been a difficult proposition, but not with the Apple iPhone. "Good luck finding a platform that has the same rabid developer base," said KPCB partner partner Matt Murphy.

Mr. Murphy thinks that location based services will be "the biggest breakout opportunity" for the iPhone. Charlene Li, an analyst with Forrester Research agrees. "Today I was stuck in Sunnyvale, and I needed a place to eat lunch. A service like [Whrrl] could have been really useful," she said.

Pelago hopes to make money by mining data on the wanderings of users and delivering that data to advertisers. For example, if a local coffee shop knows someone walks to Starbucks every morning, they could offer a free coffee to introduce themselves and divert the customer. Ms. Li points out that there are privacy issues associated with that. It's something users will want to be aware of since their every movement is tracked via GPS.

BW's Peter Burrow thinks that if Steve Jobs is as impressed with Whrrl as KCBP's Matt Murphy, a demo might end up the June 9th keynote at WWDC. Pelago's CEO Jeff Holden has his fingers crossed and also hopes that Whrrl might be preloaded on all the new iPhones. "We hope to become a featured app. There's no commitment on that, but we think we have a good chance," he said.