Scrambleface is a simple app that does one thing pretty darn well. All it does is take live feed from an iPhone or latest-gen iPod touch's camera (and it does require iOS 4.0 or higher), then it turns that into a sliding puzzle for you to unscramble. It's not flashy or crazy, but it is kind of fun, and the fact that it uses the live camera feed gives it a nice twist that will appeal to kids or anyone you happen to be demonstrating the iPhone to. There are 21 randomly generated levels that can be done as time challenges if you so choose, and there's an update coming soon with Game Center integration and leaderboards.
As part of the Appvent promotion going on right now, Scrambleface is completely free today,