IK Multimedia has released a version of their AmpliTube for the iPhone. Coupled with the iRig, musicians can turn their iPhone (or iPod Touch) into a very capable practice amp complete with effects. You can pick up the iRig from Amazon for $40 and AmpliTube is available in the iPhone App Store.
I spent a bit of time with the free version of AmpliTube on my 1st gen iPhone and was utterly impressed. I only had two problems with getting it up and running. The iRig plugs into the iPhones headphone jack, and it was a but wide for the stupidly narrow iPhone jack. This was easily solved by cutting a small amount of the rubber off the plug. My first attempt to use the AmpliTube app failed somewhat. I could hear the guitar, through the headphones, but for some reason the effects were not doing anything. A quick reboot of the phone fixed that problem and it has worked trouble free since.
The iPhone version lets you connect up 3 simultaneous stompboxes (5 on the iPad), and amp, cabinet, and mic for a wide range of sounds. The full version in which you get 11 stompboxes, 5 amps, and two microphones for $20. I was pleased to see they had a chromatic tuner, metronome, and built-in mp3. I generally suck at tuning by ear, so the tuner helped a lot.
It took me a few seconds to get used to the interface, but once I understood it, making changes to the effects were quite simple. For each setup you have space for 3 pedals (5 for iPad) an amp/cabinet. You chain the effects together left to right, and can even repeat an effect if you wish.
Output from the iRig is suitable for head phones as well as line-in to a mixing board. Sound was very good and seemed to accurately reproduce the full rich sounds of the amp. You can purchase more stompboxes through the in-app store. Prices for the extra pedals were $2.99 but they occasionally have specials for $0.99. Amps are a bit pricier at $4.99. If you plan to buy more than a few it quickly becomes economical to purchase the full version for $19.99.
It appears to be a hit with quite a few rock starts as well. Richard Fortus of GNR and Claudio Sanchez of Coheed & Cambira both gave it rave reviews. Click through to see both videos.