Developer: Pocketglow Inc.
Price: $0.99 Download on the App Store
Just like the real thing, you place the iPhone in your mouth and slide from side to side to play notes. There are two buttons which allow you to choose from chords or draw notes, widening the app's capabilities. If, for some reason, you don't like the idea of placing dirty electronic devices in your mouth, you can play with your finger as well.
While I can't say Harmonica is terribly useful, you'll get some novelty fun out of it for a while.