I spent the last couple hours hacking my iPhone and now have the following additional capabilities:

• terminal.app (with vi, ssh, etc)
• ichat.app (via Apollo)
• voice recorder
• rss reader
• perl, ruby, and python

And it's not nearly as hard as it would seem.

Start by installing AppTappInstaller on your Mac. It will "jailbreak" your iPhone and put an installer in your fourth row of apps in your "springboard" window (aka your home screen). Then, you get to seamlessly download and install everything else you want/need from there, such as the "dock" app launcher (since you only have 4 slots left and one taken up by installer, you need some kind of app launcher).

And that's about it! A full fledged OS X workstation in your pocket!