The Tin Can app takes advantage of the iPhone's audio ports to send and receive messages using sound. This deceptively unadorned app points the way to jailbreak-free hardware solutions for the iPhone -
For those of you who are technically inclined, Tin Can uses frequency shift keying (FSK) to send data from one iPhone to the other. This is the same technique used by early modems to transmit data.
FSK uses alternating frequencies to represent binary data. For instance, to transmit a '1' using FSK you might use a 4 kHz signal, whereas to transmit a '0' you might use a 3 kHz signal. You would then alternate the two frequencies to send sequences of ones and zeroes.
What we have done, in essence, is turn the iPhone into a simple modem using its speaker and microphone. Pretty cool.
iPhone app from the authors of iPhone Hacks