I spend a lot of my time with a dry erase marker and whiteboard sketching diagrams for clients. I draw use case diagrams, flow charts, mind maps, you name it. On my Macs, I use the shape tools in Pages to draw my diagrams, but I often wish for a tool that would let me sketch charts on my iPhone.
Instaviz (click opens iTunes), from Pixelglow Software, is exactly what the doctor ordered. You can sketch out a rough shape (circle, rectangle, square, diamond, or triangle) with your finger, and Instaviz "cleans up" your sketch by turning it into a clean, symmetrical shape. Links between shapes are done by just dragging a finger between the shapes, and Instaviz automatically enters a straight or curved line to connect the shapes.
You can choose colors for the different shapes and lines through a color picker, zoom in or out using the familiar iPhone two-finger pinch/reverse-pinch gestures, add or edit labels, and scroll around your diagram. To erase objects, you tap on them and then shake the iPhone "Etch-A-Sketch" style.
The US$9.99 app can export graphs to a MobileMe iDisk or any WebDAV server in DOT/GV or PDF format. Here's a video showing the app in action: