It's not quite on the level of Xbox Live yet -- Polarbit is offering a free beta of their server software on the website, so you've apparently got to have your own server running (or sign on to someone else's) to race against your friends online. I just gave it a shot, and it worked well. The lobby system is a little awkward and without voice chat (strange how much I've just taken it for granted in multiplayer nowadays), it's hard to tell whether people are playing or just waiting in a room (or why they're dropping out of the race, as a few players did while I played). But once you get into the game, it's Raging Thunder with other people driving the cars. Well done.
It would be nice to see player names above cars. Easier to do trash talking when you know who you're talking about. This is only the beginning, however -- here's to many, many great online multiplayer experiences on the iPhone.
Update: Commenters have piped up (thanks!) with some other games that have attempted online multiplayer, including Tap Tap, Galcon, and Adrenaline Pool. Keep in mind that we're not talking about wifi multiplayer here, though that's cool, too -- this is real-time multiplayer with other people who are around the world.