I always assumed, as smart phone processing power and mobile operating systems grew more powerful, it would only a matter of time before this stuff gets real. From the Rutger's release on their research:
Rootkit attacks on smart phones or upcoming tablet computers could be more devastating because smart phone owners tend to carry their phones with them all the time. This creates opportunities for potential attackers to eavesdrop, extract personal information from phone directories, or just pinpoint a user's whereabouts by querying the phone's Global Positioning System (GPS) receiver. Smart phones also have new ways for malware to enter the system, such as through a Bluetooth radio channel or via text message.
I've no doubt that all of the malware that plagues PCs and the Internet are going to spread to smart phones: viruses, worms, Trojans, keystroke loggers, and rootkits. Though I don't agree that smart phone attacks are more devastating than attacks on PCs and notebooks. At least not yet. Today, you don't have to bank, trade stocks, or even store much sensitive information on your smart phone. That luxury may change in time, however.
In their tests they didn't use any actual software flaws or vulnerabilities to inject the rootkits, rather they developed the rootkit using a phone that a software developer would use and inserted the rootkit into the system. Though I don't think it'd be too hard to trick many users to download a game or something to their phone that injects one of these things.
Such attacks - like remotely turning on a phone's microphone - aren't entirely new, as it's been known that Bluetooth enabled devices have been susceptible to such attacks for some time. However, using SMS and having the phone call the attacker would mean there's no distance limitation, such as is the case with Bluetooth attacks.
While not a significant threat today, it's growing more concerning as these phones grow more powerful, we're running more applications on them, and we'll be conducting more sensitive transactions on our phones in the years ahead.