MAME is an emulator of arcade machines. I helped port this to the iPod, and added many enhancements to the source. It runs on iPodLinux, rather than Apple's OS.
I also did a bunch of work using TuracoCL to convert imagery to look correct on the iPod Nano, where the imagery for the games has to be scaled down 50% of its original size. I tweaked the characters to look decent in 4x4 pixel characters, rather than the orignal of 8x8.
More information and downloads on the web page.
The graphics library we used to port this has improved since the initial porting effort. I need to revisit this soon to rebuild it all against this updated library. (This will enable it to work on more iPods.)