Apple recently applied for a patent to put contacts on the iPhone home screen. The patent gives pretty solid evidence that the next iPhone OS iteration will include this feature.
The patent shows that the custom icons for contacts won’t just be for speed dialing but will be able to perform wide range of things, such as launching any app you specify that is personalized to the contact or display information about the contact.
One of the options has the icon for the contact that shows up on your home screen based on the persons proximity to you, so if someone gets within a certain range to you then they will show up on your home screen, however this will probably only work on iPhones or possibly phones that have GPS.
The icon can also be used to invoke one or more applications that are personalized to the contact. The icon can be modified to display information related to the contact. In one aspect, an icon associated with an entity can be temporarily displayed on the mobile device based on the proximity of the mobile device to the entity.
Sam's Blog 
Ill never use that feature, mostly because Im an iPod Touch user. There is already an app to do tgis if your device is jailbroken anyways…
Yes thats true however I don’t believe it includes the location awareness of the patent. It’s nice when Apple cathes up to the jailbreak world.