BeatRider is an upcoming iPhone and iPod Touch rhythm game (like DDR or Tap Tap Revenge) that actually allows you to use your own MP3s.
The app accomplishes this by allowing you to upload your music to their servers. You can then play these songs from within the game, itself. The reason for the convoluted process is that existing App Store apps can not directly access your music library. As a result, the server upload is their solution to this issue.
The announced iPhone 3.0 firmware reportedly does allow access to your iPhone's music library so this may not be an issue in the future.
The developers have posted this video which shows the game in action, and walks through the uploading process. Note, we started the video at the beginning of actual gameplay, if you would like to see the upload process, rewind the video.
Once you get past the uploading demonstration, the game itself actually looks quite nice. The game has been submitted to the App Store and is awaiting approval.