Cycorder is a free video recording application capable of capturing 6-15 frames per second, depending on lighting conditions.
Moving on, video files are recorded at 384 x 288 pixels, at 4x3 (television) aspect ratio. Sure, the resolution isn't pretty but the video output is actually watchable.
It works by using real-time MJPEG video compression that is commonly found in most point and shoot digital cameras. The best part is that there is no delay in between recording the video and saving it on your iPhone, which ensures quality video on the fly.
As of now, all recorded Quicktime.mov files can be retrieved from /var/mobile/Media/Videos via SSH.
However, Cycorder is not available for iPhone O.S 4 and as such there has been no development since 2008.