Before I start, it is important to note that the following scenario could be applied to a Native Blackberry Application or Native Palm Application, etc.  I simply used the Native iPhone Application as it is the most common question I get. 

I am often asked about developing application for the mobile world - specifically the iPhone.  The question often comes in some variation of "can you develop and iPhone application for me".  I understand the motivation as there are a ton of cool things opening up on the mobile frontier.  I always start by asking one question... have you emphatically decided that the application should be a Native iPhone Application and not a Mobile Web Application?  The differences are that one is downloaded to, installed on and used by the iPhone and the iPhone only; whereas the other is a Web Application that is specific to the mobile world, but can be used by the iPhone, Blackberry, HTC, Palm, Droid, etc.  You limit your market when you go with a Native iPhone Application, but that may be what you want. 

As a general rule, I always recommend a Mobile Web Application unless one or more of the following are true:

1. You want and/or need to use the iPhone’s user interface and not just the web browser’s interface on the iPhone.  For example, you want to use the iPhone menuing, sliders or motion sensors outside of the capabilities provided by the Safari Web Browser (or Opera Mini/Mobile if you have installed either of those).

2. You want and/or need to use the application when the phone is not connected to the Internet/Web.

3. You want and/or need to store data locally and use that data when disconnected from the Internet/Web.

If any of the above are true, then you most probably need a Native iPhone application.  The big caveat is that if you go with an Native iPhone application, and later decide to expand to other mobile operating systems, you will have to write and support code for each new mobile operating system that you want to target (Palm, Blackberry, etc).  In addition, since a native application runs on the phone itself and not just over the Web, you will have to write code for each differing version of each mobile operating system you want to target (if those differences affect your application).