Console emulators have been a firm fixture of the software grey market practically since the dawn of the Internet. A legal loophole regarding back-ups means that emulation software itself is on solid legal ground (to the degree that Steve Jobs once demoed a PlayStation emulator for Mac during a keynote over significant protest by Sony).
Unsurprisingly, emulation is one of the most popular reasons to jailbreak the iPhone. One (former) console-maker has realized that it’s usually smarter to provide a legal alternative rather than try to squash the bootleg edition. According to Gizmodo, Sega is on the verge of launching Ultimate Genesis, a free emulator that includes Space Harrier II and will enable in-app purchases of what will soon be a large library of titles from the dawn of the 16-bit era. It hasn’t shown up in the App Store yet, but based on Sega’s existing iPhone titles, from Sonic the Hedgehog to Super Monkey Ball 2 means it will be worth waiting for.
Ultimate Genesis: Sega’s Official Console Emulator for iPhone [Gizmodo]