A bit of quick news that was left pending over the weekend, while we were covering other stuff.

AOL has announced a streaming radio application for the iPhone. This app will stream more than 300 radio stations, over both Wi-Fi and cellular connection.

But it isn’t just plain old radio–this app makes clever use of some of the features built into the iPhone. If you run it on your 3G iPhone, for example, this app will use the GPS feature to locate the nearest CBS station and tune into it automatically, ensuring excellent sound quality at all times.

Apple is so pleased with this app that it has given it “best entertainment app” award. AOL radio is going to be free, so expect ads to accompany the programs.

AOL maybe the first to launch a radio app on the iPhone, but I’m sure Pandora and last.fm aren’t far behind.