If you’re going to create your own iPhone games, with help from a good game engine, your life will be much easier, and you’ll be able to focus on executing your ideas, not the low-level details involving too much math and OpenGL.

cocos2d for iPhone

This is an open source 2D game engine imported from its original Python implementation. The API is organized in several easy-to-understand OOP concepts: Director, Scene, Layer and Sprite. It also sports two powerful 2D physics engine: Chipmunk and Box2d. The full feature list can be found here:

http://www.cocos2d-iphone.org/wiki/doku.php/prog_guide:index

OGRE

OGRE is a famous open source 3D game engine, now it being ported to iPhone.

Unity iPhone

Unity is a commercial iPhone game development environment, it has got everything you’ll need for developing a 3D game. The only problem is the licensing price is too high, the combination of Unity Pro and iPhone Advanced could cost you $1499 + $1499. It’s quite a lot.

Unity feature list can be found here:

http://unity3d.com/unity/whats-new/iphone-1.5

Oolong Engine

Oolong Engine is a new open source 3D game engine, it has built-in support for Bullet Physics SDK, which is also open sourced and being supported by AMD recently.