A group of developers, led by someone using the handle "planetbeing," have produced a method to load Linux 2.6's kernel to the iPhone. The hack is supported on all generations of the Apple iPhone and the first generation of the iPod Touch. According to the announcement, however "many drivers are still missing, but it's enough that a real alternative operating system is running on the iPhone."
According to the post the following are completed: Framebuffer driver, Serial driver, Serial over USB driver, Interrupts, MMU, and Clock, etc. Items still in progress include: Read/Write NAND support, wireless LAN, touchscreen, sound, accelerometer, baseband support.
A video demonstration has been posted.
It's clear that this port of Linux is in its infancy and not of much use to most iPhone users. Above all there is no phone support in this port so you'll end up with an iPhone that won't make calls, etc.