As promised, a small review:
I played through Green Hill Zones Act 1, 2 and 3, and I will admit the emulation is spot on, as expected. As has been noted, there are framerate issues, especially at the waterfalls in such areas as the beginning of GHZ 2, where there is a HUGE drop in framerate. The one pickle I have is the special zones, where I keep getting the urge to move the iPhone in tune with Sonic. For some reason, I find them harder using the on-screen control interface.
Controls work as expected, but if you have large fingers, it can be a problem using the d-pad. I had many times where I accidentally went backwards, was looking up, or rolled. The A Button is fine. If you're used to the feel of a controller's buttons to help you, you'll have to get used to this. Also, if you're concerned with your fingers getting in the way of the screen, you can minimize the screen so the controls don't interfere with the game. However, this makes the game very small.
As I mentioned earlier, there's a sound emulation error in the video posted previously. I tried to copy this, but just couldn't do it.
Overall, it's a nifty game for the iPhone/iPod Touch, but you have to get used to the drop in framerate and the lack of grip with an on-screen interface.