6/4/2010: General Availability. iPhly is available in App Store.
iPhly is an iPhone application for radio control models. It turns your iPhone or iPod Touch into an R/C transmitter.
iPhly does not require jailbreaking. It does not use WiFi or Bluetooth. iPhly uses R/C transmitter modules to control standard R/C receivers.
5/23/2010 Podcast: I speak with Chris Anderson of Wired and Tim Trueman of DiyDrones.com.
iPhone ships with 3-axis accelerometers and a touch screen. iPhly uses these as primary inputs. Tilting the phone controls pitch and roll--as if moving the stick in a full-size airplane or the right stick on a Mode 2 transmitter. To increase throttle, you swipe up on the screen. You swipe down to decrease. Swiping left or right controls the rudder. This is similar to the left stick. Similarly to the left stick on a transmitter, throttle stays where you put it, but rudder returns to center if you lift your finger off it. Rudder trim buttons control where exactly it returns to.
I notice that I don't look at the screen much when I'm flying--I get most of my feedback from observing the model. Nonetheless, iPhly sports a spiffy UI that emulates an attitude indicator in case you want to see how it interprets your gestures. I (ab)use glideslope and localizer bars to indicate throttle and rudder position.
I notice some pilots use both hands with iPhly--you can see an example of this technique towards the end of the YouTube video. I find it natural to use one hand. I move my wrist to control the stick, and slide my thumb to control rudder and throttle. Having all controls in one hand makes it embarrassingly easy to catch your model in flight.
iPhly connects an iPhone and an off-the-shelf RF module together to control an R/C model. Most hobby transmitters understand the PPM protocol. Pulse Position Modulation has its origins in the late 1960s and enjoys wide implementation. It is also a relatively simple pulse train--simple enough that an iPhone can generate this waveform as an audio stream. It's almost, but not entirely unlike software radio. You feed the signal from the headphone jack into the module's input, and voila, you can fly airplanes with your phone.
This approach requires minimal hardware "glue" between the phone and the module. It bypasses the need to access hardware in the phone that is not available to mortals. This approach also has some limitations--most importantly, audio resolution limits servo position resolution. iPhone ships with 44.1kHz audio and that limits the maximum resolution to 44 steps per channel. As a licensee in the Made For iPod/Works with iPhone program, I'm working with Apple to release a more elaborate device that communicates with the phone using a serial protocol. My intention is to offer both types of devices so that customers may choose the price/performance point they prefer.
PPM is the common denominator in R/C. All RF modules accept it as input, and most transmitters accept it as "buddy" or "student" input. In this case iPhly replaces the student transmitter. Depending on the module you use, you may need to use simple components to match electrical input and output levels. The Spektrum DSM module requires a single resistor. A buddy cord for Hitec Eclipse requires two resistors and a transistor. In some cases, the only thing you need is a stereo cable. JR and Spektrum radios use 3.5mm audio plugs for buddy cords: you plug one end into the phone, the other into the TX and that's it.
Here is what I have observed working so far or have reliable reports of user success:
I welcome reports of users' successes or failures with other equipment.
iPhly can also act as a joystick for Windows PCs through the SmartPropoPlus driver. This setup requires only a stereo cord from the phone's audio jack to the PC's microphone or line input.
iPhly is in active beta testing. Blade mCX helicopters and Vapor airplanes are flying regularly with this system. If you wish to become a beta tester, you can see the requirements and conditions on the beta-testing page.

I am not a lawyer. I share the following as my best understanding and encourage everyone to stay within their understanding of their local laws and regulations.
In the United States, FCC certifies 2.4GHz modules as complete transmitters. The encoder you connect to a module is irrelevant as far as the radio operation goes--this is how Spektrum can market their modules for use in Futaba transmitters. This means that you can legally use any 2.4 module with iPhly, including Spektrum DSM, Futaba FASST, Hitec Spectra 2.4 and a host of Chinese modules--Assan, Corona, FrSky, FlySky, FlyDream, etc.
FCC certifies 72MHz and 27MHz modules together with their antennas, which are part of the transmitter enclosure. This means that even though you can physically plug a 72MHz module into iPhly, connect any 110cm antenna to it and have it fly your 72MHz receiver, FCC regulations prohibit such operation. However, you can feed the iPhly signal into a buddy-box connector of your 72MHz transmitter and fly that way. If you are a Ham radio operator, you can use 50MHz modules with iPhly.
Important! Beyond legal issues, operating an RF module without an antenna is likely to damage it or at least heat it up severely. If you use a MHz module with iPhly, it is your responsibility to connect an appropriate antenna to the relevant output.
I wish to thank these sites for blogging iPhly:
Make: magazineTUAWDIY DronesAll Things That FlyiPhoneItalia.comiphoneclub.nliphones.ruispazio.netcellbots.comiphon.frFXModelRC-PilotCaptainRecruiter