I splashed out on an iPod touch for my wife last week ("That's a wonderful gift" said the sales person. "I'm a wonderful husband" was my reply). Of course she has hardly had a chance to use it, what with me "configuring" it for her, and the children wanting to "test it out".
Part of the "configuration" involved me looking for a decent chess program (for when she isn't using it!). There are certainly plenty out there, including some well known names (eg Shredder or Chess Genius).
However I was looking for a free program for the moment, and the best one that I found was "Glaurung Chess". This program has been around for a while, and I've previously seen it as a Winboard engine. It is written by Tord Rumstad and for Open source advocates, it is released under Gnu Public Licence (which isn't recognised by Apple for iPod applications).
It has a fairly basic chess functionality (new game, set playing strength etc) although you can choose a style and the size of the opening book. But given that the iPod touch isn't a fully blown computer (at least in the sense of size and storage), you probably aren't looking for a database enabled chess program.
So a thumbs up from me for "Glaurung Chess" if you are looking for a program for your iPod/iPhone.