From the press release:
Amazon.com, Inc. (NASDAQ: AMZN) today announced a new update to Kindle for iPad and Kindle for iPhone and iPod touch, which allows readers to enjoy the benefits of embedded video and audio clips in Kindle books. The first books to take advantage of this new technology, including Rick Steves' London by Rick Steves and Together We Cannot Fail by Terry Golway, are available in the Kindle Store at www.amazon.com/kindleaudiovideo.
Actually, this isn't that new. Mobipocket format supported embedded audio back before they were bought by Amazon. I never could get it to work, though.
This will likely raise a question in everyone's mind. Is Amazon going to release a LCD based Kindle? It's possible, but I would bet against it. A Kindle tablet would have to compete directly against other tablets. The iPad alone would make this a risky idea.
P.S. I don't have my iTouch with me, so I'm going to have to wait until this evening to try the new features.