Although the iPhone and iPod touch were designed with your finger in mind, for those who have trouble controlling the screen (or who have long, styled fingernails), there is the iPhone Japanese Touch Stylus.
The stylus has a flexible tip that mimics your finger's capacitive ability to control the objects on the screen. The tip is flexible, allowing for easy dragging without gouging your screen. It also includes a handy SIM eject tool.
The stylus is imported from Japan, and is available in silver or black. Both colors are $14.99 from ThinkGeek.