Hey someone was listening. Saw this posted over at TUAW (The Unofficial Apple Weblog). pTerm has been released and a patched version is coming out right behind it. For $4.99 you can rule the world. I'm going to buy it and give it a quick review.
Link to TUAW post here pTerm released, update due soon.
If someone comes up with a good SSH/Telnet client for iPhone, that would be a killer app. I don't own an iPhone 3G but if I did that's one thing that I would need. Because as a Data Comm guy, I could access my network via the 3G and Cisco IPSEC client. Then fire up that SSH/Telnet client and I could rule the world.