Those who have played Super Monkey Ball on the iPhone basically all agree that its a cuspid-clamping affair. The merest tilt is enough to send your bubble-contained simian flying into an existentially terrifying purple vapor, Super Monkey Ball's metaphor for chimpanzee death.
So what's the deal? Why is the iPhone's accelerometer so crap at steering? An EA developer put it this way: "Think of it as a loose analog stick...you get lots of random data."
As developers have more time to figure out their various iPhone accelerometer smoothing algorithms, controls should get better (just as they did after the Wii's release), but using the accelerometer to steer or control an on-screen character is just never going to be as responsive or exact as a D-pad.
Which is fine. I think we all knew that: the iPhone is not magic. But I suspect we're going to see a gaming culture on the iPhone based more primarily around multi-touch. It's notable that the iPhone port of Star Wars: The Force Unleashed is using the accelerometer only as a means to move your character to set waypoints, where you then fight in a static position using touch gestures. Very on-rails.
It'll be interesting to see how developers approach the iPhone when they have more than a few months to come up with an app: on the surface of things, the iPhone has both the advantages of a Wii and a Nintendo DS as a controller, but the roux is very watery, and there's all sorts of crap floating in it.