FourTrack is probably the coolest iPhone Recording App I’ve seen. It transforms your phone into a multi-track recorder! Imagine the possibilites..
Couple this with GuitarJack, an audio in adapter made by the same company, and you can have a direct input for your guitar, keyboard, or mic. The only downside, beside the $199 price, is that GuitarJack doesn’t work with the new iPhone 4’s, but I’m sure they’ll update their model soon.