OLED is an emissive display technology - it means that the OLED materials emit light. This is in contrast to a reflective display - which uses an external light source - an ePaper display for example, or a 'real' paper. OLEDs are bright, and provide great image quality, but because they are emissive, when viewed under direct sunlight (or any strong light source) they have a readability problem.
The best display technology for direct sunlight (besides ePaper) is said to be transflective LCDs, which uses a reflective layer under the LCD's filter. However this reduces the transmissive capabilities of the LCD, and the contrast is compromised as well. With OLEDs, unfortunately, it's not possible to use a reflective layer as the OLEDs themselves emit light.
We have received some word from Nokia N85 users saying that the display is not readable in sunlight - it behaves very poorly. It seems this issue is widespread. Check out this photo for example, showing a prototype N85 outside:
Here's a short video showing the Samsung Omnia II outside. As you can see, the contrast is very poor. In this case they use the automatic brightness mode.
Here's another video, showing how the Omnia II behaves with 50% and 100% brightness. Even in 100% brightness, it is not very good:
Using a good anti-reflective coating or foil, OLEDs lose about 40% of their brightness. You can use a brighter OLED to get good results (which will effect battery life, of course). One of the problem with mobile phones is that the companies add a glossy plastic layer to the display (possibly to protect against broken glass), which has very poor reflective properties.
I have talked about this issue with Barry Young from the OLED Association. Barry says that the N85 actually had two versions. The older ones (like the one in the photo above) used a OLED that had 180 nits (brightness measurement). The new version (available since June 2009) has a better display - with 270 nits, and an improved cover glass. This one performs much better than the older displays. I'd be happy if some N85 user that has a new phone can confirm this.
In fact Barry claims that an OLED with around 300 nits will perform better than a transmissive LCD with around 750 nits. These will still have a problem with sunlight, but will at least perform much better than older, less bright OLEDs.
Here's a video showing the Samsung WB1000 (or TL320) camera. It has an OLED with 300 nits brightness. At least according to this video, it performs quite good (although the video itself feels like a Samsung ad):
Several companies are working to solve this issue - mostly trying to improve the contrast of the OLED displays. The Fraunhofer institute, for example, is working towards OLED contrast optimization in combination with high temperature stability and outcoupling enhancement structures for the automotive industry.
In conclusion, it seems that sunlight visibility is a major drawback with OLED displays, and if you use your phone mainly outside in the sun, perhaps it's best to get one with a translective LCD. But OLEDs are improving, manufacturers are just learning how to optimize them and hopefully the next generation displays will perform better.