Aurora feint The Beginning: Puzzle & Fantasy game on track to become the first MMO exclusively for iPhone. Arstechnica reviewer called it his favourite iphone game worth getting into a fight with his wife. The only downside is that the game supports only one profile per phone. So you can't have more than one player playing and saving their games.
Dactyl: The most addictive game on iPhone I've played. There is a grid of bombs and one by one they become active. Touching them defuses them. It sounds easy but the game is very fast paced and it is easy to miss one of the active bombs when you are racing against time. Great replay value.
Labyrinth Lite Edition: The classic labyrinth game where you can control a steel ball with by tilting the wooden labyrinth. A lot of effort has gone into the graphics and game experience and it just looks stunning. This is one of those games you can show off to your friends who don't have an iphone/ipod touch. Comes with 10 levels and if you want more you can create your own levels using a web browser.
Touch Hockey: FS5: An air hockey game with good animation, graphics and gameplay. The AI is a bit weak though and you can easily beat it but it is still fun and the game is very intuitive. If you are bored with the AI you can even have two player games on the same iphone or multiplayer games over Wifi. Haven't been able to test the multiplayer mode so I don't know how well that works but the two player mode works well.
Tap Tap Revenge: If you love guitar hero or dance dance revolution you will love this game. It was first available in jailbroken iphones as Tap Tap Revolution and became a huge hit. When it launched the music availability was quite lacking but right now there are tons of tunes to tap to.
Tatomic Lite: This is another take on tetris. Instead of different shapes and removing rows, you have 4 coloured balls which fall down from the top in pairs. You have to chain the same coloured balls together. When the chain reaches a certain length [which is different for different colors] it explodes and the remaining balls forms new chains.