AccuWeather.com [iTunes link]- As much as I loved The Weather Channel app, AccuWeather.com is actually slightly better. AccuWeather has everything that The Weather Channel has plus a nice backdrop showing the general state of the weather, similar to the popular HTC weather app, and an animated doppler.
Crystal Defenders Lite [iTunes link] - Square Enix, publisher of the popular Final Fantasy series, has made an iPhone game called "Crystal Defenders." That app is $7.99 but you can try it out for FREE with the Lite version. I was never a big fan of Final Fantasy but this game is okay for being a mobile phone game. This doesn't push the limits of the iPhone's capability but I found it somewhat entertaining.
Space Deadbeef [iTunes link] - This has been one of the most downloaded free games but I thought I should mention it here. Beautiful graphics combined with an interesting touch screen interface makes this a winner as a free game.
Dragon Force Light [iTunes link] - This is another vertical shoot'em up iPhone game. There's only one level but you can try out its interesting interface: your ship auto-shoots, you tilt your iPhone to move your ship left and right, and you occasionally touch the screen to fire a massive laser. The paid version is not yet out as of this writing but I assume it is coming.
Animoto Videos [iTunes link] - This is my FAVORITE free app as of late. Animoto Videos makes a video slideshow of between 8 and 16 photos you have on your iPhone. Although you can only choose the music the app provides, it is a very good app considering it is free. A paid app that lets you choose your own music would definitely be a big hit. Your video slideshow is uploaded to a site and if you register online, you can embed the video on a blog like this one. Check out the video I made: