Invisible Drum Set is the drumming app for iPhone 4 and iPod Touch (4th generation) that lets you play 16 drums out of thin air. This performance demos some of the preset drum sounds and effects.
All sounds are generated live from the app. There are built-in recording / looping features.
You can also load your own sounds! I'm curious to see what strange instruments people will make with it.
To find out more and get the app: