The Ocarina from Smule synthesizes sound in real-time based on your "wind input" (fancy talk for you blow on it), tilt, and finger placement over four graphic "holes" overlaid on the multi-touch pad. Unlike some iPhone audio apps, the sound is not pre-compiled but is generated by the individual performer. As a result, "it allows an iPhone user to explore and master the musical sounds of an entirely iPhone-native version of an ancient flute-like instrument."
Its available for $.99 at Apple's AppStore. Here's a demo and be sure to check out "Starway To Heaven" after the jump.