Don't get me wrong -- the App Store is incredible and unmatched. There truly is an app for just about everything on the iPhone. Well, everything that Apple approves of anyway. Fortunately, for those special apps that just can't pass Apple Legal muster, there is Cydia -- the third-party App Store alternative created by hacker Jay Freeman (aka saurik). Cydia is only available by jailbreaking your iPhone, a process that while relatively simple may not be for faint of heart. Here are some of the best apps you'll never see on the App Store.
Winterboard: A glaring, though likely intentional omission from the iPhone's Settings app is the ability to alter the appearance of the UI in any significant way. Thankfully, Winterboard (a pun of iPhone's UI manager Springboard), is an app that allows you to install themes that you can either create yourself or download from Cydia. At this point, there are hundreds of themes and appearance mods at the disposal of jailbreakers.
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SBSettings: SBSettings is a candidate for my most oft-used jailbreak app. It is a simple add-on that lets you swipe across the status bar (either in the home screen or while an app that doesn't hide the status bar is running) to bring up quick, customizable settings and/or toggles. As I am borderline OCD with device battery conservation I like to have brightness control as well as Wi-Fi and 3G toggles in mine. SBSettings is fully skinnable, so you can match the appearance of your Winterboard theme.
Netatalk: When you jailbreak your phone, you are able to access the root file system any number of ways, including ssh (via OpenSSH) or a simulated terminal (MobileTerminal) on the device itself. Netatalk, however, is a much more Mac-like option, enabling you to browse the iPhone file system over AppleTalk. Simply install Netatalk, enable File Sharing on your Mac and voila! The device will appear under Devices in a Finder window and you can navigate through your iPhone's files without any prior Unix knowledge.
Cycorder: For those of us relegated to non-3GS iPhones, Cycorder is a video recording app that performs surprisingly well, considering that the 2G and 3G camera hardware was supposedly not designed for video. Makes you wonder if Apple intentionally locked this feature to bolster 3GS sales.