We've mentioned the Torque gaming engine from GarageGames here a few times before -- it's a pretty powerful 3D engine that makes developing great games on the Mac that much easier. And now, they've released a version of it for the iPhone, complete with support for multitouch input and even screen gesture recognition.
I am hardly a game programmer, but my understanding is that this sits on top of the OpenGL ES system in the iPhone -- you use the Torque engine to develop, and then the iPhone runs the games developed without any other special software. The benefits are that you can use the Torque Game Builder software (which is also available for many other platforms) to put together iPhone specific games, which makes it not only easier to develop native games, but to port games from those other platforms as well.
At any rate, this is good news for both iPhone game developers and players -- the easier it gets to create quality software on the platform, the more games we'll have to choose from.