We first saw the LG Watch Phone last year at CES 2008, but it was behind glass and no one was allowed to really see how it all worked. This year, however, LG plans to break it out of the display case. At the LG press conference a few minutes ago, they demonstrated a real working prototype of the watch phone and it looks to be a real must-have for the spy wannabe in your life. It has a touch-screen user interface (!), three side-mounted buttons, Bluetooth, a speakerphone, and even a full-blown music player. It's water resistant, and it'll feature 3G HSDPA, which leads us to think it may come to AT&T some time this year.
UPDATE: We've just got more details about the watch phone. It has tempered glass, a high-quality metal casing, and is around 13.9mm thick. The touch screen itself is 1.43 inches diagonally, and features LG's Flash interface. Features include voice recognition, Text to Speech so it can read out text messages, and stereo Bluetooth. However, the huge disappointment is that the watch phone will be Europe-only (insert sad face here). We think it may still be compatible with local GSM networks, but only time will tell (apologies for the bad pun).
UPDATE 2: More updates on the Watch Phone. LG has just told us that the Watch Phone will have quad-band GSM, and that the 3G/HSDPA will be compatible with AT&T's frequency. So even if it is Europe-only, you could potentially get one unlocked and use it here. We'll see if we can get more news about pricing and availability.