Depending on what you need, you could use something like this:
http://twistedbydesigns.com/playground/
It's handy for web testing, and tends to be pretty accurate.. although a pain in the ass.
Overall, your best bet is Xcode, a mac mini, and an Ipod touch.
I've been developing games and native apps for iphone the last few months, and any other way just seems like you're jumping through too many hoops and then the previews aren't even accurate.
I've been deving on a $599 mac mini at the office, loaded it up with ram and it's incredibly fast and easy to develop once you know what you're doing.