if you want to develop for the iPhone using an older PPC-based Mac (running 10.5+), there is a way. the guys over at 3x9 and TBradford.org have a good summary of what works. essentially, you should do the following:

1. download and install the latest iPhone SDK
2. the install will not install the iPhone components when it detects a PPC platform. so, once you install the SDK, open the Packages folder in the SDK disk image, and install each of the packages that begin with iPhone
3. move everything in the /Platforms folder into the /Developer/Platforms folder
4. you then need to modify the following file (BACK IT UP FIRST!): /Developer/Platforms/iPhoneSimulator.platform/Developer/
Library/Xcode/Specifications/iPhone Simulator Architectures.xcspec. i didn't even get into the nitty-gritty, but rather, just downloaded the version of the file Tom Bradford posted here and replaced the original (AFTER I BACKED MY ORIGINAL UP!).
5. relaunch XCode and create a New Project. in the New Project dialog, you should now see the iPhone templates section

have fun...

UPDATE: i'm currently not able to debug on my iPhone from the PPC-based Mac. but the simulator runs just fine. i'll update with more details if i figure it out.