Work is being done on a MAME port for the iPhone. MAME is the Multiple Arcade Machine Emulator that allows you to run old arcade games (provided you have the proper ROM)

galaga 300

The project appears to remain very much a work-in-progress:

Project to port SDL MAME to the iPhone. The main cool feature I want to add is configurable layouts for touchscreen controls and crazy gesture based inputs. Whether MAME will actually be playable from a performance and control perspective remains to be seen.

Unfortunately, at this time, while it appears to have been built, controls don't work yet.

Related Forum: iPhone