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I'll second WritingPad - Apple needs to license this! IIRC, IBM developed this tech.
CameraBag is a great app for applying various filters (Helga, Lolo, Ansel, 1962, 1974, Fisheye, Cinema and Infrared) to photos - really makes the iPhone's 2MP camera extremely useful. This is one of my favorite apps for photos.
Google Earth is out, free.
Panolab is good for stitching iPhone photos.
I've been using RunKeeper to track my runs; it's a GPS based app that uploads each run's telemetry to RunKeeper.com and interfaces to Google maps showing your course, speed and elevation. It still may be free - excellent app!
PhotoFrame turns your iPhone into a digital photo frame when its charging in its dock.
PhoneAid provides CPR instructions as well as other first aid tips.
Cosmovox is a highly configurable digital theremin.
WunderRadio is an IP based weather radio with an IP based scanner for listening in on LEOS and emergency services.
JellyCar is a great free app with game play based on soft body physics - this is really fun.
Trace is another excellent free game where your draw your own path to get your character to a destination - many worlds and multiple levels.
These are some of my favorites.
Best,
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