Even before the launch of the original iPhone in 2007, rumors swirled in blogs and message boards that Apple might integrate a front-facing camera for video conferencing into the unit. It has yet to happen more than two years later, but that hasn’t stopped Israel-based fring from making at least one part of the puzzle a reality today.

Of course, the iPhone 3GS camera (the only one officially capable of video recording) is on the back of the unit, making it difficult to use for video conferencing. Besides the fact that you won’t be able to properly frame yourself, you also won’t be able to see the other party you’re talking to.

Hailed as a “world’s first,” fring’s solution (for now) is to stick with only incoming video streams — you can see the party you’re calling, but they can’t see you. This limitation doesn’t exist for many Nokia users, however, whose Symbian S60-based handsets commonly feature a front-facing camera as well as one on the back for pictures and video.

The good news, however, is that the incoming video works both with fring-to-fring calls as well as fring-to-Skype calls, making it infinitely more useful. The feature also works with all iPhone and iPod touch models running OS 3.0 or later.

“Leveraging excellent video capabilities on the iPhone and iPod touch together with our open Internet and social environment, we’re bringing together families and friends these holidays, wherever they are,” explains fring co-founder and CEO Avi Shechter. “We were the first to bring iPhone/iPod touch users the choice to make free Internet calls…now we’re proud to continue leading the field of rich mobile-internet communication by bringing users the world’s first fring video calls over internet for the iPhone and iPod touch.”

The new version of fring is ready to download from the App Store, and as always, it’s free.