Yes, the iPhone is running a FULL version of Mac OS X

Steve Jobs confirmed yesterday at the D Conference, that indeed, the iPhone is running a full version of OS X under it's tiny shell.

How is this possible? OS X is huge! Leave it to Steve Jobs to explain:

"The entire Mac OS is gigs, a lot is data. Take out the data -- every desktop pattern, sound sample -- if you look at Safari it's not that big. It's REAL Safari, REAL OS X. We put a different user interface on it to work with a multi-touch screen... it's an amazing amount of software. "

If Stevie says it's real OS X... then who are we to say it ain't? Straight from the horses mouth!