I've heard that it doesn't work very well and while this app might be free, if you want the translation feature you have to pay £2.99 for the language pack. Right now, it can only translate from Spanish to English and vice versa, and you have to pay twice to get both.
Android has had a similar app for awhile called "Google Goggles" (now available on the iPhone too) that does a few more languages than just Spanish (for free), and now there's Google Translate, that is supposed to translate speech - only English to Spanish and vice versa at the moment but it does translate text in over 50 languages. How well it works I can't say.
http://www.appbrain.com/app/google-translate/com.google.android.apps.transl ate
And how about this? Google Translate for animals!
http://www.google.co.uk/intl/en/landing/translateforanimals/
Move over Doctor Dolittle.
I'm not sure I want to know what my dog is saying. LOL
[video=youtube;3I24bSteJpw]http://www.youtube.com/watch?v=3I24bSteJpw&feature=player_embedded[/video]