The fact that the Unreal 3 engine now runs seamlessly on iOS devices is a huge deal. This is the same game engine that's responsible for many high-quality titles on the Xbox 360 and PlayStation 3, so having it run games on a device that fits in the palm of your hand is pretty mind-blowing. You can get a taste of Epic Games' Unreal 3 in iOS efforts with Epic Citadel, available on the App Store -- but because of the demanding graphical requirements, it's only compatible with the iPhone 3GS, iPhone 4, iPad, and 3rd and 4th generation iPod touches. If you don't have one of those devices, the demo likely won't run at all.
A demo is really all Epic Citadel is; it's not a game as such, since there's really nothing for you to do except wander around and gape at the environment. And gape you will, because this is console-quality graphics on a 3.5 inch screen. While wandering through the castle grounds, I exclaimed several times, "I can't believe this is running on a freaking cell phone." The graphics in Epic Citadel easily surpass anything I've seen on the iPhone before, and they put the Nintendo DS to shame. Even the Wii doesn't put out graphics with this level of detail. To my eyes, only the Xbox 360, PS3, and PC games are competitive with the graphical richness I'm seeing in Epic Citadel on the iPhone.
Don't just take my word for it, though. Either download the demo yourself ,or if you can't run it on your device, check out our coverage in the video above. The game engine is truly amazing on the iPhone 4, especially with the Retina Display. And if this is the future of gaming in iOS, ... Nintendo and Sony had better step up their game.