I'm not even going to ask, but microfiber works best, followed by soft cloth, then, I guess(?) paper towels. Getting the material a little damp is a good idea as well, you can dry it with the same thing you're using to clean the phone.
Microfiber cloth for me. If it is particularly fingerprinted or dirty, I will first spray the cloth with iKlear/Sunglass cleaner (it's formulated to be safe for polycarb/glass so it works well on LCD screens and other displays). No paper towels for this $600 phone.
I'm essentially trying to get rid of some germs. I would like to clean my phone since I have it by my face most of the time. I know water is the safest but we don't wash our hands with just water; so, I'm kinda looking for a "soap"
Germs are way overrated. Unless you put your fingers in your mouth a lot (ironic how I mentioned licking my finger in the last post), I wouldn't worry about it. Just a wipe with a very slightly damp cloth should do.
Windex on a paper towel or Clorox disinfecting wipes.
Works like a charm and no damage. This is how I've cleaned three generations of iPhones.
EDIT: I've found Windex to work better on the glass of the iPhone 4. Makes it look brand new. If you're worried, get the eco-friendly green version of Windex because it has less chemicals and is made with plants.