ZodTTD has updated his Playstation 1 emulator PSX4iPhone.

Changes:

– Updated GUI. Much improved!
– Buttons highlight when pressed.
– Runs on all 2.x.x firmwares to date.
– Large performance gains from all previous versions.
– Much more stable gameplay.
– Volume control can be changed and save states/bookmarks can be made during gameplay!

http://www.zodttd.com/forums/showthread.php?t=3976