It integrates the touch sensors directly into the LCD package, thinning it in the process, and allowing for a slimmer device. Given that those sources confirm once again what we've heard numerous times - that the iPhone 5 screen will be with 30% larger area than the 3.5-incher we have now, a thinner display part would still allow for a very compact device.
Other rumored specs are a metal back, 32nm dual-core processor, Qualcomm LTE world radio and NFC, while we haven't heard anything new about the camera yet.
As for the operating system, it is expected to come with the retail version of iOS 6, of course, with its souped-up Siri voice assistant.
source: MyDrivers (translated)