Alex Winston, Ltd. has demoed an app that allows you to control Wolfenstein 3D from a second iPhone through its headphone jack, all without jailbreaking your phone.
The app uses a crossover audio cable to allow communication directly through the standard 3.5mm headphone jack, bringing a virtual joystick and real-time inventory and health updates to the screen on the second phone.
As TUAW points out, while this is certainly cool, it probably won't make waves; the new iPhone SDK includes some pretty rich hooks for peripheral devices in their 1,000 new APIs.