One of the big questions that new iPhone developers face is whether to build web applications or to build native applications for the iPhone.
The very simple and obvious reason for building a native application is if you need to access the hardware features like camera, accelerometer etc. or if you need to build a rich graphical applications like games etc.
Incase your application does not fall in the below mentioned bracket then you there are a couple of factors that you need to consider:
Firstly, and most importantly the biggest advantage of building native web applicaitons is that you can list them on the App Store. The app store gives you an instant method of distributing your application directly to all iPhone owners throughout the world. Add to it the fact that you can charge users for native applications from the App stores gives you a very easy way to get revenue for your application.
Even though web applications can also be listed on a web applications directory on the apple web site, but this has not been a big enough source for distribution for any web app developers till now.
Secondly, and on the down side, a native application is much much harder to build then a web application. If customizing your web application to the iPhone takes about a week, then building the same on the iPhone natively could take any where from a month to three months.
Overall, a web application only makes sense currently if you want to extend your existing web application to the iPhone - assuming that you already have users on your web application which can take advantage of your presence on the iPhone. If you are building a standalone app for the iPhone you are much better of building a native app which can take advantage of the distribution capability of the iPhone App store.