Nuance Communications has released Dragon Dictation for the iPhone, which allows users to enter text by talking to their smartphone, instead of using the keyboard.

Nuance Dragon Dictation for the iPhoneWith this app, spoken words are transcribed using speech recognition. This can be one line or several paragraphs.

This text can then be transfered to an e-mail, text message, or the phone's clipboard, where it can be pasted into another app, from a word processor to Facebook.

This software uses the same technology in Dragon NaturallySpeaking, the well-known desktop application that performs the same function.

It's Free (Temporarily)
Nuance's Dragon Dictation is available for free for a limited time from the iPhone App Store.

Unlike many apps, this one can only be used by the iPhone, not the iPod touch, because it requires the device to have a microphone.