['89cab]

I agree with many of the previous recommendations, and will investigate many that I don’t have, but will add the following free programs:

Games (and I’m not much of a game guy) –
Dondrinkn is great for competition with friends over a beer.
Penguin Lite is another great waste of time.

Cool stuff –
Google voice search – I was in my garage and couldn’t remember (for my leaf blower oil/gas formula) “how many ounces there are in a gallon” and received an answer in seconds.
Snap Tell allows you to take a picture of a product (I’ve only used on DVDs and books but understand it is very flexible), and a little like Shazam it gives you info on what it is and where to buy it online and locally. And read Amazon reviews of the product.
Big Oven for recipes.
Dual Level which serves as a small carpenter’s level.

Ones I expect to use regularly, but haven’t yet –
Mint.com – finances management.
Evernote – which has been mentioned by others.

Iphone is the best tool and the best toy I’ve ever owned. I purchased it in August of 2007 and it’s hard to believe the amount of improvements and innovations that are available in that short time. Fun to think of the new directions and improvements that are likely to come.