My sister just purchased an iPhone 3G and asked me if I knew of a stylus that worked with the touch screen. She likes to take notes on the fly.
I looked into it and found the Pogo Stylus.
The sleek design of the Pogo Stylus features an ultra-light aluminum body with an anodized finish and laser graphics. The soft tip glides easily over the surface of the display, making it fun and easy to sketch, draw characters, or just slide to unlock. Sized for accuracy, it does away with the awkward typos and misfires common to fingertip-only use.
Eliminating fingers has the added benefit of keeping the screen free of smudges and grease. Designed to firmly hug the contours of the iPhone 3G, the Pogo Stylus travel clip will keep your stylus close at hand. A second clip is included for the original iPhone and iPod touch.
You can read more about the stylus and order it HERE for $19.95.