Kevin Rose and his buddies over at Digg.com have launched Digg iPhone Beta, an iPhone-compatible version of the Digg.com user-driven news website.

But perhaps the most interesting aspect of this story is how the product was developed. Just last weekend, Rose sat down with a developer and told him that if the iPhone application was completed within 48 hours, he would personally buy the man an iPhone. According to Rose’s blog, the developer completed the task in just enough time and the Digg founder bought him the storied iPhone.

So what did the developer come up with? The Digg application features iPhone-like story scrolling with mini permalink pages that include the top five comments on each story. The app also allows users to login and dig stories and will let you jump to any topic with ease. Much like the site, the iPhone beta version will be updated constantly.