First, the main iPod app itself. This is how it looks now on my iPhone 4:
During playback, the usual transport controls now have a new arrow-into-square button shown above in blue. Tapping that pops up a menu with a list of possible sources for the audio stream:
Tap the button, music comes out of where you choose. Simple! This is particularly good for my podcast listening. Most days, I come in from walking my dogs whilst listening to a podcast, and would like to finish listening to it as I make breakfast. Previously, the only way I could achieve that was to sync my iPhone to my MacBook (so it would know where I had gotten up to) and re-start the stream from MacBook to Airport Express. Now, I just hit a single button in the iPhone, and the podcast picks right up where I left off.
if you choose a video from within your iPod app (i.e. one synced from iTunes) instead, it keeps video on the screen and directs the audio to the Airport Express -- more or less. During testing of several different files, it would sometimes start a few seconds out of sync between audio and video, and require a few pause/restart presses to come into alignment. Generally once it was aligned it stayed there though, so it seems to be a handshaking problem. I was also performing my testing on a secondary AE unit which is a client of my main AE, so this is quite a difficult radio environment to push the software through. I occasionally get dropouts from iTunes streaming sourced from my MacBook as well.
This also has the huge benefit, compared to the old iTunes-based streaming, that guests in my house can stream their music from their iOS devices to my speakers. This is something I've been repeatedly asked for by pretty much everyone I've shown the Airport Express to, so it's good to see Apple filling that functionality gap at last.
Third party app support appears to be far superior for audio streaming than it is for video streaming. Last.fm, for example, has an AirPlay button in the UI:
Apps that haven't updated to have an AirPlay button in their own UI can still use AirPlay controls built directly into the OS. In a rare non-obvious move by Apple, these are accessed by double-tapping Home to enter the multitasking UI, then swiping right twice -- past the transport controls and rotation lock and to a new control pane. Here's how it looks with the Spotify music streaming app running (kinda like Pandora for us Europeans):
You can pop these controls up at any time, in any app, even games:
However, games are hopeless. The audio streaming process takes around two seconds and game action on screen can't be delayed to maintain synchronization so it simply plays the audio behind the action -- several seconds behind. Which is basically useless.
You can even use the audio streaming with video apps running on the iPhone. Here's Air Video, streaming an AVI from my Windows Home Server, and sporting that sleek new AirPlay control:
As with streaming video from the iPod app, I found this a little hit-and-miss in terms of getting sound via Airport Express and video on the iPhone's screen synced up, but stopping and starting usually fixed that. I also tested this on the iOS built-in YouTube app and the BBC iPlayer service; both worked fine.
Two more notes from my experience so far. Firstly, you should keep in mind that heavy use of streaming is going to hammer your iPhone's battery life, as you might expect for something that keeps the Wifi radio active for the entire length of time it's running. If you're planning on doing a lot of it you'll want to keep a spare charger to hand.
Finally, when AirPlay is enabled on your iPhone, it works exactly like an invisible wire from the headphones port to the Airport Express's output jack. This means almost everything is transferred down to it -- even SMS beeps, to my considerable surprise! Fortunately ringtones aren't though, but even so if you are staying within range of your wireless network but moving out of earshot of your speaker, you might like to make sure AirPlay is turned off first.