Touch Screens and the iPhone
Hand-held devices have had touch screens for a long time. The difference between the old touch screen devices and Apple's iPhone is this: Where the older devices can only read one touch at a time, the iPhone's touch screen can read multiple touches on different parts of the screen at the same time--Apple calls that "multi-touch." What lets the iPhone do this is the technology behind the screen.
How the iPhone Senses a Touch
Some of the old touch screen devices pick up where you touch the screen because of the pressure of your touch. The pressure of your touch pushes two plates of a capacitor together at the point where you touch, and that changes the electrical charge on the screen at that point. Since on the old devices the entire screen is only one capacitor, it can only output one signal at a time, indicating what part of the screen you touched at what time. The iPhone's screen doesn't use just one capacitor for the whole screen. Instead, every position on the iPhone's screen essentially has its own capacitor, so that every position on the screen can send its own signal to the processor.
Why You Can Only Touch With Your Finger
There is a drawback to all this. Most other touch screen devices allow the use of a stylus, or at least the touch screen can function when you touch it with something besides your finger. But with the iPhone, you have to touch the screen with your finger. This is because the iPhone can have a capacitor at every point on the screen only because each capacitor relies on feedback from the electricity in your finger to operate. When you touch the screen, the screen at that point senses the natural capacitance of your body (your body's ability to hold an electrical charge) and then registers a change in current at that point on the screen. If you use a stylus to touch the iPhone's screen or touch it with a gloved hand, the iPhone will not be able to pick up any natural capacitance and so it won't know you're touching it there.
In reality, the iPhone has one half of a capacitor at every point on the screen. The other half of the capacitor is your finger. Together, the circuit beneath the glass cover and the capacitance in your finger change the electrical charge at that point on the screen.
Each position on the iPhone's screen can independently pick up a touch. This means that you can touch the screen in more than one place at a time, and the iPhone will register all touches. Apple used this multi-touch feature in many of the applications and software on the phone. For example, when you are using a maps application or browsing your pictures on the phone, you can make a pinching motion on the surface of the screen and that gesture will zoom the image out. If you want to zoom in, you start with your fingers together on the screen's surface and then pull your fingers apart and watch as the application zooms in on where you first touched the screen.