Inspired by the 126 film format which was introduced in 1963 and associated with low-end point-and-shoot cameras. Format 126 brings that retro square format to the digital age in the form of this iPhone app.
Format 126 is an easy to use app, simply load or take a photo, convert it to square format and then apply any of the following effects or options.
Effects:

- Neutral -  Leaves the colors unaffected, allowing you to convert your photo to the square format with or without border
- ColorPlus - Gives your photos an extra color boost
- PolaColor - Gives you photos that retro Polaroid look
- ColorHint - Bleaches out all but the strongest colors in you photos
- LOFI - Gives your photos that extra toy camera look
- Mono - Gives your photos that good old Black and White look
- MonoPlus - Gives your photos that Black and White look with added contrast
- MonoHi - Gives your photos that ultra hi contrast Black and White look
- Vignetting - Adds a subtle vignette to your photos
- Border - This option allows you to add a white border to your Format 126 photos
- Square Format - Just in case you don’t want that square format look, we have enabled this option to allow you to switch off the square format

About them:
Glyn Evans is the owner, publisher and editor of the iPhoneography blog, which as the name suggests covers all things related to iPhone photography and videography, whilst Chris Comair is the developer of popular iPhone apps LOFI, Polarize and EffectsLab.

more here

and the flickr group

Polaroid on your computer? Poladroid is THE choice. This lovely made and free program can be downloaded here.

check the flickr group for more

From chris comair come some very fine apps for your i-phone: Polarize and LOFI. Both free at the app store.

Want to add a funky retro look to your photos? Polarize will do the job for you! Polarize is the only iPhone application that will do a series of pixel-by-pixel modifications to your photos, getting that true look. No cheezy overlays are done here.

Polarize gives you:
-A great unique look to your photos
-The ability to write at the bottom of your photos with a custom hand written font
-Any size photo is accepted!
-High resolution output

Check out the flicker project polaroid group and meet the huge community who is in love with that app.

http://www.flickr.com/groups/projectpolaroid

/

The japanese program Toycamera AnalogColor is certainly among my top 3 apps.
The program gives you a wide and very nice spectrum of vintage color effects you can also choose the framing. If you want polaroid framing no problem. I especially love the cover open feature. The program is is easy to use ( just drag and drop).  You can buy it for 9.99 through their website or just check the blog to see some samples .

Digital photography never looked so analog.The Hipstamatic for iPhone is an application that brings back the look, feel, unpredictable beauty, and fun of plastic toy cameras of the past. The application keeps the quirks of shooting old school but gives you the ability to swap lenses, film, and flash settings all with the swipe of a finger. Characterized by vignettes, blurring, over saturation, discolored images, Hipstaprints have a casual and seemingly accidental snapshot feel. The Hipstamatic can be downloaded to any iPhone sporting the 3.1 or beyond software update. For $1.99 you can download the base model Hipstamatic 100 which includes the John S and Jimmy Lenses, as well as Ina’s 1969 and Kodot Verichrome film and a standard flash option complete with humming sound.

Original history:

Back in 1982, the Hisptamatic was legendary, well with at least a few hundred small town kids in Wis- consin. Known for its ability to swap lenses and take multiple film formats, this plastic camera was well on its way to being a big deal. Sadly less than 200 cam- eras were produced. Today, a digital reproduction is brought to the iPhone with lots of added features.

more on the original hipstomatic

The i-phone app