Works pretty good
The app works unexpectedly accurate. I strapped my iPhone to my arm and went jogging. It seemed to be within an accuracy of at least >95% without any calibration/special settings.
I dont know how useful/exact the calories counter is, but I wouldnt trust on it :)
Here are some more pictures: http://www.marc-seeger.de/2008/08/10/pedometer-step-counting-for-the-iphone/
marc.seeger about
Pedometer