Market Circle, the company that makes the really cool and useful Daylite 3, has released iPhoney, "a way to see how your Web creations will look on iPhone." But does it really do a good job?
If you want a virtual iPhone, keep looking because iPhoney is not it. It shows a photorealistic iPhone on screen and uses a 320 x 480 WebKit view to surf the Web or test local web pages or applications. WebKit is the framework used by Safari in Mac OS X and the Jesus Phone.
It also can rotate the iPhone, but you won't be getting the automatic scaling and all the eye candy. You won't even get the touch capabilities to zoom in or out and the scrolling. Too bad for those looking to play with an actual simulation, but hey, it's nice, it's good for developers and best of all, it's free.
Product page [Market Circle - Thanks Oscar]