Since the iPhone only allows one program to be running at a time users of streaming radio applications can’t read their email or look at Twitter while listening to music. The new iPhone OS 3.0 has added a feature that helps make this possible, although it’s not perfect.
If you open a compatible streaming radio link in Safari on the iPhone it will open a QuickTime player that will play the stream. Since Safari is allowed to run in the background, you can press the home button and start up other applications while the stream is still playing in Safari. The downside is that you can’t do anything else in Safari while the stream is playing.
Try it. Click on the Indie 103.1 playlist URL or the Houndstooth Radio stream URL from your iPhone.
I’ll add a feature to Stream.ly in the next update to do this automatically from the application. I’ll also update the Stream.ly website so you can browse the station directory from Safari on the phone and listen to a station without needing the application itself. The application adds a lot of nice features though. 
UPDATE: It’s still in a “beta” stage, but you can now browse around the Stream.ly Radio web directory and play stations in Safari from this URL. iPhone only for now.
