So, almost since when the iPhone first came out, there were reports that people had been able to hack it. Lots of fun tutorials sprang up online, filled with descriptions that varied from vague to clinical, from fuzzy ("It's so easy!") to terrifying ("I hope you know how to use a soddering iron, and aren't afraid of wrecking your $600 phone!") Much like with the PSP homebrew community, I've been interested in following these developments, but haven't seen fit to risk my own hardware.
Until now, that is. The state of development has reached the state where I'm comfortable to step off the Steve Jobs Approved path, and thrash around in the thicket a bit. The biggest thing is that the Installer.app has gotten almost absurdly easy to use. You don't need to do anything with your iPhone at all; just download a patch for iTunes, and poof! A new icon, labeled "Installer", magically appears on your home screen, and it serves as your gateway to a world of applications.
What kind of apps are out there? I personally went ahead with this because, in answer to my fervent desires, a third-party developer saw fit to add LBS to the iPhone. This is a great little product from a company called Navizon, and it manages to work without assistance from the carrier. The system is called "assisted GPS", and it's actually a rather admirable community-based approach: people submit the GPS coordinates of various cell tower and WiFi access points; the app determines where you're connecting from, maps that into its database, and reports back a best guess of where you're calling from. It doesn't give the same level of precision that you can get from true GPS, but in my opinion, it's more than good enough for my purposes. You just pop open the application, and after a few seconds to do the lookup it shoots you right into the excellent native Google Maps application with your location highlighted From there, of course, you can do local searching, get directions, whatever.
There are a LOT of other applications available as well. We're still in that exciting early period where the market hasn't firmed yet, and as a result any person sitting in their bedroom can make an iPhone app and have it show up. Let's just say that the quality at this point is quite variable. Games seem to have the worst of it - there are ports of an NES emulator and Doom, which sounds cool, except for the fact that there's no good way to control the input for either game, so you can't do anything but watch the pretty screens.
On the "wow, cool!" side is the fact that there is a complete (albeit slimmed-down) BSD environment, and an Open SSH client and server package as well. I'm such a nerd, but already I'm thinking of how I'll be able to tunnel into my web server, update my azureus queue of downloads, heck even reboot my machine if I need to, all without bringing up another box. Sigh... way cool. They even are bringing over whole development toolchains, though the thought of programming on the iPhone keyboard pains me.
The coolest game I've played yet is a thing called Tap Tap Revolution. As you might imagine, it is a rhythm game like DDR, but it seems particularly well suited to the iPhone. You can download free tracks, or else have it search your iTunes library for songs that have been game-ified. When you start playing, you're listening to your actual .mp3 or .aac file, and as you see beats come streaming down the screen, you need to tap each one in time. It's a very simple game, but really quite fun, and nicely brings together the unique capabilities of the iPhone (music player, touch screen, large display, and network connection).
I'm still in the exploring phase now, but things look promising so far. I won't necessarily say "Start installing apps if you have an iPhone," but I will say that my experiences so far have been positive. It's very encouraging to see the development community step up and fill a gap that Apple left in their product.