While the iPhone 3G is getting much of the hype right now, it still has what many consider a lackluster camera. Sony Ericsson looks to be readying a new flagship smartphone for its Cyber-shot line that will pack a whopping 8.1-megapixel camera.The folks over at the Unofficial Sony Ericsson blog are saying they have the inside scoop on the upcoming Sony Ericsson C905, code-named Shiho (hopefully, this will get rebranded before it's released). The camera also is expected to have face recognition, auto focus, image stabilization, red-eye reduction, xenon flash, and will have a new feature called Smart Contrast.

Now, we all know that megapixel races don't necessarily mean better photos. There's no word on what type of lens this phone will be using, but OmniVision recently showed a way to pack more megapixels in a small package without giving up resolution.

Besides the headline-grabbing camera, Sony's latest is expected to have built-in Wi-Fi with DLNA support, full 3G support (UMTS and HSDPA included), Bluetooth, compatibility with Exchange ActiveSync, integrated A-GPS, and it should be bundled with a 2 GB memory stick Micro M2.

Other details remain unclear, and reps from Sony didn't comment. Sources at the Unofficial Sony Ericsson blog said to look for Sony to officially announce this around June 17, and it'll be shipped in early fourth quarter.

(Photo: Unofficial Sony Ericsson blog)