iTimeLapse Pro is now free. Not sure for how long, but its quiet a good app (especially for free).
I have used it to make timelapse of sunrises and it works well, of course the disadvantage is you cant use your phone while taking the time lapse.
Anyway enjoy :)
*** Seems it has now expired and its $1.19AU again, which is still cheaper than it was before iOS4 .. but not free ***
According to lots of the reviews it isn't working with the iPhone 4 atm, but I downloaded it anyway just to have it for the future :)