I recently bought colors from the AppStore for my iPhone. They ported the software from the NDS. It's pretty much the same application as on the ds which is amazing.
The Opacity can be controled by tilting your iPhone. It has an undo function (which takes forever but I guess they'll fix it in the next version).
Since it's hard to paint with your fingers I bought the Pogo Stylus. It's one of the more expensive models (around 20$) but after reading reviews I found out that the cheaper pens have annoying delays. The stylus arrived yesterday! It's amazing and the opacity control with the iphone tilting works perfectly!
The guys from colors did again a great job! Here is my first iphone colors attempt.