iLightr is a virtual cigarette lighter for iPhone and iPod touch that is available in the App Store now (click opens iTunes). It's only US$0.99 and is an amazingly good simulation of a lighter.
You can choose from several different case designs, light the lighter with either a flick of the wrist or by sliding your finger along the sparker, and the flame sways back and forth as you move the iPhone. The sound effects alone are pretty amazing.
iLighter was developed by Ubermind and is localized in English, French, German, Spanish, and Japanese. The developers do not offer a guarantee that iLighter will cause an 80's hair band to play an encore, nor can iLighter be used to start fires.