Not an exact replacement, but Google does an automatic spell check on search. If you want a definition, just use "define: <word>" in Safari's Google search feature. It'll give you a list of definitions found on the web. Since it's mostly text, it should be reasonable over EDGE, too.
any widget made for mac os x would make for a great iphone app. i mean, that's all dictionary looks like to me, just with a different skin. add dictionary, translation, unit converter, flight tracker and all the third party widgets, and you'd have yourself quite the library of iphone "apps."