I found this article to be very interesting. A passenger who boarded an Australian Airline flight's iPhone 4 apparently self-combusted on board during the flight. Kind of reminds me of that one incident when that one guy's Verizon Droid X exploded while he was taking a call.
the battery is a lithium polymer battery and once they get hot they spur out huge amounts of smoke and get very hot. I race RC cars we use lipo batteries ( lithium polymer batteries) they are stable but if they swell up or charge up improperly they will do that.