France Telecom/Orange in the UK has introduced the LG watchphone. It has a touchscreen and features video calling. According to the release out this morning, it's being positioned as a kind of fashion statement:

Available on a first-come-first-serve basis, and one device per customer to those who arrive in person at the store - the handmade 3G+ watchphone will guarantee those fortunate enough to purchase one that they’ll turn heads on the high street. The device’s slick scratch resistant touch-screen interface makes writing text messages easy, while an in-built speaker and MP3/AAC player lets you listen to the Essential James Bond theme album when you’re imprisoned in a fake volcano or battling with Jaws.

I have to say: c'est cool. But what about background noise? Click the image below to see the phone in action. 

While we might label this a novelty device that is not mainstream -- especially not a price point of £500 (just over $800) -- this (hopefully) is just the beginning of creative, connected devices that we'll start to see in the market. 

___

Related: Here are some potential "phones of the future." Less futuristic, we're also likely to see the first Android tablet, the Archos 5, in the West by mid-September.