MacRumours have posted footage of an iPhone game currently in development at Int13, a French developer.

It's a good example of adapting existing game controls onto a touch screen.

• 320 * 320 pixels playing area
• Touch controls with a virtual steering wheel
• 3 vehicle classes (karts, motorbikes, hovercrafts)
• 6 characters with different vehicles
• Downloadable content (new vehicles, new tracks)
• Wifi online multiplayer with match making and up to four simultaneous players

More information at MacRumours