I have been using this for a couple of months. TiltShift lets you add effects to iPhone photos that normally would require an expensive camera lens or complicated software such as Photoshop.
While typically used to achieve a "miniature" effect, the application can also be used to throw the background or foreground out of focus. In effect, it gives some conrol over the depth of field on a camera that is fixed focus.
As others have noted, it does not work well with every photo; it depends on the composition of the photo and the desired effect. But on some photos the effect is really quite striking, especially if you are interested in "art" photography, and with an iPhone you can take some surprisingly good art photos (as in every graphic art the quality of the product depends more on the skill of the artist than on the sophistication of the equipment).
Since this is an effect that is added after the photo is taken (rather than at the moment the photo is taken) you can play around with photos that you have taken months or years earlier. (E.g., take a photo from the 1940s, scan it, load it on your iPhone, and then use TiltShift).
The app is easy to use and I have had no problems with it. For just a few bucks its a great tool to have available.
Siguiriya about TiltShift