iSwap Faces was just released! It is an app that lets you swap two people's faces in any photo stored on your phone. You can see some examples here: http://blackfrogindustries.com/ Direct link to the App Store: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=305557780&mt=8
Those pics look hilarious! I may just have to check this out. Does the app automatically blend in the switched faces? They definitely look funky.
Yeah, you just place the masks over their faces, adjust the size (by pinching/stretching) and rotation (drag the rotation arrows), and it does the rest for you.