use iMovie's stabilize mode during video post-processing, available on the desktop edition of iMovie, included with iLife '10
any app that claims to add stability while recording likely wont work as it's not able to provide the motion compensation that real image stabilization software and hardware uses in camcorders that include the feature. this is based on my experience with VR lenses on my Nikon DSLR as this is a combined software and mechanical solution to provide active stabilization.
a pure software real-time solution is beyond the processing ability of the iPhone without hardware, and it doesnt have all of the hardware necessary for pre-emptive adjustment. post-processing is the only reliable solution currently.