Photo Blur (free) is a clever app that uses your existing pictures to create nice-looking wall paper on your iOS device.
The app is simple to use. Select a photo from your library, or take a picture directly from the app using the iPhone's camera. You'll see a slider that lets you determine the amount of blur, and another one to shift the colors. You can also select a pattern to overlay your image. One pattern is provided, and more require an in-app purchase.
The results depend on the photo you seed the app with. I found some of my landscape photos looked great after processing with Photo Blur. You also get the satisfaction of knowing the wallpaper is your creation, not something taken from