I thought I'd post a quick article on Operation Gadget from the iPhone to see what it's like.
The keyboard definitely isn't designed with HTML input in mind. Every paragraph tag takes four taps to generate each "less than" and "greater than" sign.
The landscape mode works well for entry into Movable Type's form fields, but the keyboard takes up 60 percent of the vertical space on the screen. This makes revision of previously-typed senences tough for me.
I tried this exercise three years ago when I got my Treo 650. I'd say writing a story on the iPhone is slightly better, but not a quantum leap. Here's where we could probably use a dedicated iPhone app. I wonder if a "Web 2.0" solution could be crafted?