Originally labeled by Gizmodo as an illogical fake, the first video below shows a modal system where applications are self contained and can be dragged around the screen. It was considered unlikely and "stupid" for each app to have its own keyboard.
Now a new video has surfaced which claims to show the development platform for the new OS. It could be possible that the OS will download and run iPhone apps from the App Store; however, they currently don't make full use of the screen because there are no "tablet" apps yet.
Take a look at the videos and let us know what you think in the comments!