Sakai's iGotSynth is a new free virtual synth for the iPhone.
Here's what Sakai has to say about iGotSynth:
This App is an analog synthesizer simulator. User can use 4 type oscillators.(sin,squ,saw,noise) and user can -24dB/oct. filter. Filter's cut frequency is changed by LFO. User can change LFO volume and frequency. User can save parameter.
The price is right, so give it a try and let us know what you think!