Using a custom engine called the "Retro Software Development Kit," Christian Whitehead put together a demo of Sonic CD running on the iPhone. It looks pretty much like Sonic CD, which is impressive considering that he rebuilt the game from scratch rather than porting the original source (except, presumably, for graphics). In fact, just about the only problem we can see from the demo is outside of Whitehead's control -- the fact that the iPhone doesn't have any buttons.
A note was posted yesterday to the Sega Twitter account indicating that the company had been made sufficiently aware of the demo, with the PR rep promising to "bring it up at our brainstorming meeting." Hopefully the ideas brought up at this brainstorming meeting don't include suing this guy.