Apple recent app iMovie for iPhone 4 seems to have a great start. At $4.99 I’d say it worth the money! With iMovie :
Make beautiful HD movies anywhere with iMovie, the fun, feature-rich video editing app for iPhone 4. Create a video postcard of your day at the beach and publish it to the web — without ever leaving your spot in the sand. Or make a movie of your child’s birthday party and send it to your parents — while the party is in full swing. With iMovie for iPhone, you can start several projects and finish them whenever you want and wherever you are.
Here is a quick look at the feature :
- Tap to add or record video right into your project.
- Drag to trim the lengths of video clips and photos.
- Pinch to zoom the timeline and get a closer look.
- Slide to scrub through the video in your project.
- Choose from a selection of themes including Modern, Bright, Travel, Playful, and News.
- Each theme includes a matching set of titles and transitions – plus its own soundtrack.
- Instantly change themes or swap themed elements in your project.
- Titles and graphics automatically update with location data from your video.
- Select from included music that matches each iMovie theme, or select from your own song library.
- Enable ducking to automatically lower the volume of background music and highlight audio from video clips.
- Add photos from your own library, or take a picture and drop it into your project.
- Customize each photo with a unique “Ken Burns” panning effect.
- Export your movie in one of three sizes: Medium, Large, or HD.
- Share your movie on the web in a MobileMe gallery or on YouTube.
- Send your movie to friends and family in an email or via an MMS message.
- Easily sync your movie back to your computer.
Requirements: Compatible with iPhone 4. Requires iOS 4.0 or later.
The compatibility is a main issue, it doesn’t support 3G or 3GS! 
