Make has published an interview with Michael Koppelman, an iPhone developer and model rocket enthusiast, who decided that combining his two hobbies together would be a good idea. The result: the launching of an iPhone Rocket.
Koppelman used the iPhones retail packaging to develop a launch platform for his rocket that would hold the iPhone securely inside. He also included the standard rocket parachute and another one just for the iPhone. He created an app that constantly polled the iPhone's GPS and accelerometers, logging them to a file and then transmitting the data from the GPS over the web so that the unit could be located if it became lost.
You can check Koppelman's website for further information about the iPhone Rocket a 3D rendition of the GPS data here; the iPhone's accelerometer readings here; and data received from the iPhone while it was in flight here.
Note that no iPhone's were harmed during any of the launches of this rocket and the extensive GPS data prevented them from getting lost as well. The rocket actually reached 1300 feet before coming back to Earth.