This will be useable iff the iOS contacts list keeps track of which of your contacts have iOS devices and which don't. That will let the Messages application d

This will be useable iff the iOS contacts list keeps track of which of your contacts have iOS devices and which don't. That will let the Messages application decide whether to send an iMessages message or an SMS/MMS, without user intervention. Presumably that could even be automatically updated - the iOS 5 phone can contact an Apple database and register itself as "iMessages-aware", and sending devices can check the recipient phone numbers in that database. Also, I note that sending contacts and delivery/read receipts are both features that SMS has always had.