One of the hottest iPhone stories of the past several months was Ralf Ackermann's Bluetooth keyboard hack where he connected a standard Apple Bluetooth keyboard to an iPhone. The problem with the Ackermann hack is that it requires you to jailbreak your phone and perform other acts of voodoo most people probably aren't comfortable with.
Engineers Zack Gainsforth and George Dean want to change all that and have developed a way to attach a keyboard to the iPhone using the standard audio jack. The best part is that it doesn't require jailbreaking your iPhone.
Expanding on their audio port modem, PerceptDev developed a hardware and software solution that allows infrared keyboards to be used for typing on the iPhone -- using less than $20 of electronics.
Zack created a modified version of the microcontroller firmware used for the audio port modem, expanded to detect an infrared signal or read from a USB host controller, then read the data transmitted by an attached keyboard and convert it to an FSK signal for transmission to an iPhone.
George then modified the iPhone application to interpret the keyboard data and display the appropriate characters on-screen.
A YouTube video of the process is embedded above.