I am also working on a character sheet for the iPhone/iPod touch. Unlike mpattee, however, mine will auto-calculate where possible.
I think there's room for both types of apps. Some people want to calculate everything by hand and others (like myself) just want everything but the Misc Mods to be calculated for them.
The way I see it, there just isn't very much room for interpretation when you have to add half levels, ability mods, armor bonuses, class bonuses...these modifiers are fixed and depend on another variable such as the character's level, his/her ability scores or the armor he/she is wearing. The only thing that is flexible to a certain degree is the miscellaneous modifiers which are usually thrown in to take into account more complex rules. I see players miscalculate things on their character sheet often enough to realize that there's room for a character sheet that sums up the modifiers and bonuses. Couple that with the fact that it's very difficult to fit all that information on the iPhone/iPod touch's tiny screen, it makes total sense to hide the unmutable modifiers and bonuses from the user. Of course, my app still shows how the calculation is done so users can confirm that the calculation was done correctly but he/she has to specifically push a 'Details' button which shows the formula and values used in the calculation. The result is a nice clutter-free interface.
I plan to originally charge 99 cents for this app...simply because the app will eventually evolve to include power cards, a smart dice roller and add new class bonuses and racial bonuses. And programming all this is taking up a non-negligeable amount of my time. But I trust 99 cents is the least of anyone's worries if they can see the benefit of such an application.