GigaOM has a little insight into how they're planning to do it this year, and if you're interested in the nuts-and-bolts of keeping a cell phone network up and running (or at least trying to -- this is AT&T, after all), it's worth a read. They're beefing up the cell towers in the city's vicinity, setting up a whole new system around the convention center itself, and putting money into the backend as well, to try and increase bandwidth coming into the region. I don't know if they've done anything like this before (I can't really judge with Macworld -- while my iPhone worked fine most of the time, I still only have a 1G, and I was using Sprint MiFi on my Macbook most of the time), but it sounds like a pretty comprehensive setup.
Of course, the other reason AT&T is pushing to get ready for SXSW is that the convention has become sort of an unofficial testing ground for the next big social apps. A few years ago, Twitter made its first big push around SXSW, and last year, Foursquare was the app to use (which has since spawned a brand new genre of app, the "check-in" network). So what's going to be the app pushing data through the AT&T network this year? The buzz so far is around Twitter's coming ad platform, though it's hard to think that an ad platform could be a killer app. My money's on some sort of location-based social game -- while Foursquare has gaming elements, I think an app like MyTown could take the concept even farther, and we still haven't really seen an actual GPS-based RPG or MMO break out. Even those of us who aren't at SXSW this year will be paying attention to what people are doing on their iPhones there, because odds are good that the app that clicks with attendees there will be what we're all playing with in a few months.