Seriously. After finally having waited long enough for the ridiculous Apple lines to go away, I picked up a 3G iPhone the other day. And of course I went through and ravaged the iTunes store for all the good free apps. Of course that meant the facebook and myspace apps, shazam (which is real fun to play with though not terribly practical) and Showtimes. Showtimes is incredible simply because it senses your location and pulls up the nearest movie theater and shows you movie times.
But Pandora is the end all, be all application for the iPhone. I've used Pandora in the past (http://www.pandora.com). It's basically internet radio with a twist: It's highly effective at categorizing music properly and sending you music you would like. But I had to stop because previous companies blocked streaming music over the web. Not any longer. Since you're forced to get an unlimited data plan, why not make use of it?
The brilliance is in the way that it breaks down music. For instance, I'm a huge Pearl Jam fan. My first station was a Pearl Jam station. So the first song was a live version of "Yellow Ledbetter". From there it started adding some Nirvana, Radiohead, U2, Jimi Hendrix, Led Zeppelin, Smashing Pumpkins, etc. If you don't like a song, just give it a thumbs down and it will never come up again.
On top of that, like a song a lot? Like they played a live version of Radioheads "Creep" that I thoroughly enjoyed. Click on the up arrow and buy it directly from iTunes. Incredible.
The only issue I have with it is that, unlike the iPod app, when you exit the application and try to open another application the music stops. But I've used it extensively this week (mostly through our Wi-Fi hotspot at work) and couldn't love it more.