What is that hole under the glass on the top?

Markus is correct, that hole is an ALS or, ambient light sensor. It is really only used for one thing, tha auto-backlight feature that you can enable or disable under the settings menu. Unfortionatly, it isn't a camera, and every iDevice has at least one (iPhone has a few for detecting when someone puts their face up to it) and that's about all it does.

I had the same question as well, until I tried to place my finger over the said hole when the ALS option is activated, but it didn't change the brightness on my screen at all. I'm not sure what it can be then otherwise.

It is the front camara and nothing else!

ALS(ambient light sensor