Since before the iPhone was released, passionate 1Password users have been begging us to support it. As Canadians we couldn't even get one, so Roustem and I travelled to Chicago to purchase a few for development.
After several grueling weeks, we are proud to announce that 1Password 2.5 sports a new icon on its toolbar!

Sync to iPhone will export all your 1Password data to an encrypted Safari Bookmarklet, which can then be used on the iPhone (or iPod Touch) to access all your information. Of course everything is encrypted with some seriously strong cryptography, namely 448-bit Blowfish with Cipher Block Chaning (CBC) and randomized salt.
Without further ado, let's see how this works!
Clicking Sync to iPhone will bring up a new window:

The password you provide will be used to encrypt all your information using 448 bit Blowfish encryption. The information can only be viewed if the correct password is given, otherwise it is completely unreadable.
You can optionally store your iPhone password into the default login keychain; only do this if you have properly secured your login keychain (i.e. lock on sleep and use a strong password).
Your encrypted 1Password data is then stored into a Safari Bookmarklet, which is a standard bookmark, but instead of containing just an address, it contains the entire web page. By default we name the bookmarklet 1Password and put it as a root element:

Note the previous screenshot was of Safari 2. In Safari 3, bookmarks are organized differently. Use CMD-Option-B to Show All Bookmarks, and you will see 1Password under the Bookmarks section:

If you want, you can rename the bookmarklet or move it to another folder. The next time you export we will find the bookmarklet and update it.
Once the 1Password bookmarklet is created, you can launch iTunes perform a sync.

Once synced, you can find 1Password in your iPhone bookmarks:

Clicking the bookmark will open a page asking for your Access Code. Enter the same Access Code you used during the export:

If the password was correct, you will be shown your standard 1Password sections:

Tapping each section will show a list of all the entries, and tapping an individual entry will show its details.

With 1Password for iPhone, you can now sync all your information and take it with you, safely and securely.
To grab your copy of 1Password 2.5 Beta, visit the 1Password 2.5 Beta forum. In a few days you can get an automatic update to 2.5 from within the 1Passwd application; be sure to enable Automatic Updates and allow Betas from the 1Passwd Update Preferences.
Please stop by the forum and tell us what you think! And, enjoy your iPhone!