One of my favorite games when the iPhone 3G came out last year was Asphalt 4: Elite Racing. That really got me hooked on iPhone gaming. Up until then, one of the more graphic intensive games had been Crash Bandicoot Nitro Kart 3D. I spent a lot of the Thanksgiving and Christmas holidays playing it.
The next racing game from Gameloft was Ferrari GT: Evolution. I wasn't a particular Ferrari fan but I liked it better than the other racing games on the iPhone at the time.
After I maxed out both games, I got Need For Speed: Undercover. Although that was pretty fun, it had a little too much storyline for me and I hit a wall I couldn't get past. Someday I want to finish it though.
And now, Gameloft has come out with Asphalt 5 [iTunes link] for $6.99. I already ran a couple of races with two different cars. It's a lot more of the same great gameplay along with better graphics (although the graphics are not as good as some other racing games) and the shortcuts are more interesting. I have only played one course so far though. I love hitting things on the side of the road and eliminating other opponents. If you have an iPhone 3G I would suggest a reboot before starting up the game. It is very graphic-intensive.
I give it a hearty 5 stars because it is the next-generation of my first love on the iphone.