Who doesn't love killing digital Nazis?
Wolfenstein 3D Classic: Running around 8-bit halls blasting Nazis just doesn't get old, does it? If you loved Wolfenstein on your Packard Bell in 1991, you'll love it even more on your iPhone. It's $5, from iD.
New York Times 2.0: I've wanted to love the NYT app since it came out in the early days of the App Store, but now I actually kind of do. Version 2.0 greatly enhances download and processing speed, even over EDGE, and lets you easily save articles for offline viewing. And it doesn't seem to crash every two seconds like before or display images only when it felt like it. Still free.
MotionX GPS: The folks at MotionX make some of our favorite iPhone apps, and they've outdone themselves with MotionX GPS. It's the only GPS app that can cache significant chunks of open-source maps, and it also can upload geocaching tracks, geotag photos, and do just about everything else one would hope from an outdoor-centric GPS. There's a nearly cripple-free lite version for free and a $3 paid that adds a few additional functions.
Scrabble: EA's Scrabble app got a nice update that ties into their Facebook version, allowing you to play games with friends from the iPhone. There's live chat, stat trackers, and support for multiple concurrent games. It's $5.