What does the new “Retina Display" mean for iPhone developers?

Question

Yesterday, Apple announced a higher resolution display for the iPhone 4. What does this mean for developers? More image detection and sharing code?

Can and should I just design for iPhone 4 and let iphone 3 up and down scale everything?

EDIT:

Perhaps the best way is better?

Answer 1

Or is it originally the other way around? What does it just pixelate the old code? Scaling is likely to look bad.