Well, ZodTTD is at it again. He has got psx4iphone, a PlayStation emulator, running on an iPhone 3GS and says that it is pretty sweet.
“I now have psx4iphone running very speedy on the 3GS. It’s at the point where Final Fantasy 7 is fullspeed at very least without sound. The build is rough around the edges, as you can’t switch games without restarting the emulator, and only memory card saves are currently working, no save states just yet. Both these issues are being worked on.”
Below is a video demo of psx4iphone running on an iPhone 3GS.
For more info, check out THIS post.