Someone did an application to detect metal using the Android G1. Is this because the G1 is more smartypanties than other smartphones? Is it magic perhaps? No, it's a clever use of the built-in compass.
As you know, a compass detects the magnetic field of the Earth. And when they get close to an iron core, they get happy, which is what happens to the G1.
As you can see in the video, this won't serve you to detect treasures in the beach. It can serve, however, as a handheld metal detector like those they use in airports. You know. Those that allow you to pass your hands all over someone's body to see if they are hiding metal somewhere?