Pro HDR [$1.99 -iTunes link] is a fantastic little app that brings ">high dynamic range photography to your iPhone. The way it works is simple; Pro HDR asks you to take a photo of a "dark" part of what you are taking a photograph of, then do the same for the "light" part. Next, the app takes the two images, aligns, straightens and blends them automatically to give you a final result; it is quite clever. You also have the ability to save the photo when done, email it and adjust the subject's brightness, contrast, saturation and warmth.
If file size is important to you, you can change whether to save as full size or a lower resolution for your library or for email. Oh, and one more thing, you can take images from your library, you don't need to take the pictures in real-time.
I was very pleased with the results of this $1.99 app and I am sure you will too. It is a lot easier than doing it yourself! To see some great examples of what this app can do, check out their gallery.