ZodTTD, creator of popular console emulators such as gpsPhone, psx4all, NES, SNES, and Genesis has stated that a team of hackers has been busy building prototypes for what's called the iControlPad.
Pictured above, the new gamepad will give iPhone and iPod Touch users the ability to play games the way they were intended to be played, on a gamepad. On May 17th, the first prototype had been completed. The team gave the controller a psp look. It looks very sleek, and doubles as a protective case. Things are progressing fast and no modifications have to be made to use it. You simply slide in your iPhone and it locks into the controller via the dock connector. There will be full source code and SDK support in the near future! iPod Touch users will be able to buy a seperate controller specifically designed for the iPod Touch providing a snugger fit. The team does plan on manufacturing the controllers, and prices are said to be well worth what it will give to the iPhone.
A few prototype photos have been posted on icontrolpad.com, but for more news, updates, and ordering info, check out ZodTTD: Home Of Homebrew or iControlPad - Add real gaming controls to your iPhone!