This sounds unbelievable to me but when i saw this video it looks pretty real and the interesting part is that the ported Quake 3 game uses the inbuilt accelerometer for direction control and shooting is as simple as tapping on the touchscreen. The video shows Scott(the guy who did the import) with two iPod Touch devices playing Quake 3 multiplayer. Here is the Youtube video:
If you wish to play old aracade games on your iPhone/iPod Touch then here is the NES emulator which will let you emulate games like Mario, Legend of Zelda on iPhone/iPod Touch.
Here is another interesting link Doom imported to iPhone
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