Mac OS 7 which, also known as System 7 (Wikipedia), has begun a port process to the iPhone.
According to the Web site: "Welcome to the MacOS iPhone Project! We are Dedicated to putting MacOS on the iPhone. We hope to be launching the code soon, but we are wanting [sic] to complete something before fully releasing stuff, so please bare with us! But heres [sic] what we have [been] working [on] so far."
The team goes on to describe some of its work. The most difficult issue so far: getting the System 7 cursor working with the iPhone touch screen. Once that was overcome, the team was able to demonstrate the ability to access menus. The sample pictures on their Web site show the emulator running MacPaint, MacDraw, Calculator, and other system functions.
The emulator isn't without flaws; the team points out that when people go through the process of shutting down Mac OS 7, the emulator crashes, "the iPhone will hang for a few minutes and then return to the home screen."
System 7 was code-named "Big Bang" and often referred to as Mac OS 7. It was first released on May 13, 1991, by Apple. It was succeeded by Mac OS 8 in 1997. New features in System 7 included cooperative multitasking, virtual memory, personal file sharing, an improved user interface, QuickTime, and QuickDraw 3D.
You can find more information about this new emulation project at the MacOS iPhone Project, photos on Flickr; while the site does not mention this, a jailbroken iPhone would be required to install and run this app or any other emulation app due to iTunes App Store restrictions. These restrictions prohibit any kind of emulation of other operating systems from running on the iPhone.
We'd also like to see the team post a video demonstrating the app going through its paces.