Within the last few weeks several SSH clients have popped up on the App Store. From the looks of things, none of them are really great yet and none of them are free. Regardless, yesterday I finally broke down and purchased one: TouchTerm for $2.99. Anyway, here is a screenshot of me SSHed into my laptop (from an unjailbroken iphone), playing nethack inside of a screen session. Not perfect, but not too bad:
One thing you will want to do is remove the number_pad option from /etc/nethack/nethackrc.tty or ~/.nethackrc (if it's there). This let's you move around in Nethack when your keyboard doesn't have a number pad.
Also, here's a review of the four SSH clients currently (08/22/2008) available at the app store. While the author recommends TouchTerm, I have only skimmed through it; I chose TouchTerm based on the reviews in the app store.