This is rather impressive - Epic Games has been demonstrating its Unreal Engine 3 running on the 3rd Gen iPod Touch. That's the engine behind the latest versions of Unreal Tournament and other recent titles like Gears of War 2.

It's also claimed to run on the iPhone 3GS, but it won't go fast enough on older models, so don't get too excited if you haven't got the most recent Apple hardware. Still, it's likely to further invigorate the development of games around the platform.

It won't be limited to just the iPhone, though. Apparently it'll be demonstrated running on another mobile platform at CES. The smart money would be Android, but Symbian and Maemo are also possibilities.

Epic plans to license the engine to developers who want to create better-looking 3D titles on mobile handsets, so it's unlikely we'll see any Epic-branded iPhone games initially. In time, though, who knows?

We'll keep you posted.