Google says it very succinctly: “HTML5 and WebKit pave the way for mobile web applications.” HTML5 is coming and it has a lot of interesting features, from audio and video support to local storage. Combine this with the fact that web apps are a particularly attractive way to reach many mobile platforms and the WebKit browser found on the iPhone and Android platforms already implements many of the HTML5 standard, and you can see why HTML5 is so attractive for mobile apps.
With the ability of HTML5 web apps to store data locally and have the browser pass along the device’s hardware states, I believe that HTML5 wbe apps can do almost anything you could want an internet-using application to do. The only exception I can think of is high performance 3D graphics, as even great 2D graphics are possible with CSS3 and HTML5’s canvas tag. Already there are nice libraries like RaphaëlJS that work in the iPhone’s Mobile Safari.