I used it regularly with the standard apple cables on my iphone 2g. Not tried it yet with the 3gs...Was watchable on 42' tv, but not quite as good as virgin media bbc iplayer (as you'd expect!).
I just tried with my cable (3.5mm to Red/White/Yellow) and it doesn't work. The sound comes through the TV but no video. Maybe the cable is wrong or Apple want you to buy theirs?