Another idea would be for you to generate the private/public key pair in your ssh app and allowing the user to send the public key by email. That would mean that the user would have to install a new public key in the authorized_keys on the server but that would be simpler than importing the existing private key. It also has the advantage that if you loose the phone you only have to revoke the phone's key.
Generating an RSA key-pair on the iPhone (with or without a keyphrase) is definitely the preferred solution. As eth says, you could then click a button that says "Mail my public key", which would open the iPhone's Mail app with the body of the message pre-populated with the RSA pub-key. When you receive it, you just copy-and-paste it in to the ~/.ssh/authorized_keys2 file and you're good to go.
As a BlackBerry user who just got an iPhone, let me just say that one of the
best things about MidpSSH (which is GPL'd!) are its sub-pixel fonts! My BlackBerry only has a 320x240 pixel screen, but with the smalllest sub-pixel font in MidpSSH, I can get an 80x53 terminal window! Yes, the characters are very tiny, but when you are editing a file in a pinch, or need to run 'mutt' to check mail, it is extremely useful and usable. With the great iPhone screen, I'm hoping some iPhone SSH client will implement the same sub-pixel fonts as well. MidpSSH supports the following sub-pixel fonts: 3x6, 4x6, 4x7, 5x9 and 8x13. The 5x9 size in particular is
extremely crisp and readable on the BB's LCD screen for general use, and the smaller sizes work when you need to have a significant chunk of text on the screen. Here's an example of the 3x6 font on my BB, giving me 80x53:
(click to enlarge)
Like I said, I don't use it all the time (normally using 5x9), but when you need a full 80 columns, 3x6 is there for you, and it's actually usable in-person (although it may not look like it from the picture I took!)
Please look into supporting LCD-optimized sub-pixel fonts in iSSH. I realize it will be tricky because of the rotatable screen (and thus the RGB-subpixel layout orientation changes) but I really think crisp, readable fonts will be a strong selling point. The screen shot on the zinger-soft web page looks like it is use Courier.
shudder. Please don't use a font with serifs for a terminal program!