Sketches from LateNiteSoft is a native 3rd party iPhone app that turns your iPhone or iPod touch into an Etch-A-Sketch. Draw using your fingers and shake the iPhone to erase your sketch. The app uses iPhone’s built in accelerometer to do the motion sensing.

Here is a demo of the motion sensor and what it is capable of doing on the iPhone.

Use iPhone mods and hacks at your own risk! Installing 3rd Party iPhone apps requires you to jailbreak the iPhone before installing the native software and apps. You can use Installer.app for Mac OSX and iBrickr for Windows PC to do this. Browse the full list of all iPhone and iPod touch native 3rd party apps filed under the software category.

Get it here