iMo, a small startup based out of India, just revealed a new iPhone app that turns an iPhone or an iPod Touch into a joystick that works with existing PC video games. To make it work, hold the iPhone like a steering wheel and drive a race car or like a joystick to fly a fighter plane. You can also use the touchpad to fire shots and wreak havoc across town by moving the iPhone. The app should be available at the App Store soon for $0.99. iMo also plans to develop applications for other mobile platforms and include support for the Wii, PS3, and Xbox 360.

Source: iPhone Hacks