Here are some of my currect favorite iPhone apps.
Labyrinth Lite (free)
Great use of the accelerometer. Fun to play. Good way to demo the iPhone's ability to detect orientation.
Once you have demo'd the above, Level can show the doubters how useful an iPhone can be.
Tap Tap Revenge (free)
Fun game that uses the touch screen.
A slot machine that finds tasty restaurants in your area? How fun is that!?!
Find music by humming a tune. Makes use of the mic that a phone would have. I wonder if it can find the Enchilada Song - thx @rshannonsmith
Many thanks to those that demo'd these to me. I hope I get to hear about other favorites. Feel free to leave in the comments.
I have now posted twice - woohoo - I won't make this list. Of course here is a thought on one post wonders.