John Carmack from ID Software spoke with Forbes about an iPhone exclusive game that they were making. When asked about the iPhone's power, he said this:
“The iPhone, as a device, is in the same generation power-wise as the PS2 or Xbox,” he says. “The graphics are a little lower but the RAM is a lot higher. … You could easily spend $10 million on an iPhone game, but the market just can’t support that yet.”
That's really impressive for a mobile device. I just want to see developers actually use the power. Looking back at the Wii's specs, the iPhone is around as powerful as a Wii. I wonder what id is developing to say that sort of thing...?
"“I’m not announcing anything specifically, but it would be a graphical tour de force."