This is currently more proof of concept, and undoubtedly violates both Apple's terms of service and Sony's licencing. However, the folks over at ZodTTD have gotten a mostly playable PSX Emu running on the iPhone 3GS. Yeah it is a bit slow but... This is mostly exciting because of the implication for the level of games that should be possible on the system should a developer spend the time and effort on a AAA title. Check out the video bellow.
More info at the link bellow.