In order to do usability testing I'd like to record an iPhone's display along with every user action. I can't modify the application itself however jailbreaking the phone wouldn't be a problem.
Ideally I'd like to get a full resolution video of the screen display with an overlay showing touch events on top of it.
For now the best solution I've found is using a video-out cable and record its output, but with this solution I'd need an external camera to capture what the user was doing and it wouldn't be very precise.
Other ideas?