I don't think the iPhone has a model of the world with its own body in it. You could program that too, and once you also add the ability to move/act according t

I don't think the iPhone has a model of the world with its own body in it. You could program that too, and once you also add the ability to move/act according to a certain goal, you have an intelligent agent. However, making your system more or less useful is what takes the task of AI to levels of complexity we can't reach yet. Compare ants and dogs: the former is achievable in terms of simulation but not interesting, the latter can be potentially useful but is already too complex for us to implement.