Engadget reports that UK carrier O2 has confirmed that Apple is indeed working to fix the security flaw that has been reported by security researchers Charlie Miller and Collin Mulliner. According to the revelation by these security experts in a security conference (Black Hat) many GSM cellphones have a vulnerability such that they can be hacked easily by just sending SMS messages to them. This flaw allows the attacker to control any function of the phone, this includes making calls and controlling the camera.
It would be interesting to see if Apple actually reacts to this and pushes out an update as it is hard to believe that such a hack is actually possible. Our eyes are wide open waiting for an update via iTunes this weekend!
Update: The firmware update with the Patch has been released. (Earlier than expected!)