There is an iPhone application that can translate foreign languages for you on-the-fly using the camera. The augmented reality iPhone application World Lens was developed by QuestVisual.
Word Lens took about 2 and a half years to make by QuestVisual founders Otavio Good and John DeWeese. The English to Spanish / Spanish to English WordLens application costs $4.99. The translation uses Optical Character Recognition technology. ?It tries to find out what the letters are and then looks in the dictionary. Then it draws the words back on the screen in translation,? said Good.
Good said that they plan to add French, Italian, and Portuguese at some point. Check out the video demo below: