Great iPhone games -- As of February 2011

Plants vs. Zombies
Doodle Jump
Jetcar Stunts
Canabalt
Infinity Blade
The Hero
Underworlds
Gangster
NFS: Undercover
Peggle
Sim City
NOVA
Moto X Mayhem
Real Tennis
Zen Bound
Pac-Man
TapDefense
Hero of Sparta (Many don't like it but I think this was the first game that made people believe the iOS could actually be used for real gaming)
Tetris
Auditorium
Angry Birds
Flight Control
Rolando
i Love Katamari
Space Invaders Infinity Gene
Crayon Physics
Live Poker (Facebook poker game from Zynga)
Rope and Fly
Eliss
Kapowie
Edge
FixPix
Bejeweled 2
Cut the Rope
Pixelogic
Sonic 4
Grokion
Boost 3D
Real Racing 2
Rage

Other games people like that I dont so much:
Words with Friends
Chess with Friends
Fruit Ninja

Worth Mentioning:
Archibald
Star Battalion
Soosiz
Pocket Legends
Robot Unicorn

I haven't tried but people are enjoying:
NOVA 2
Dead Space