According to DLB-Network.com It appears that Apollo IM has some competition now. Twenty 08 has just released MobileChat, a native IM client for the iPhone. This client comes with a host of features including, full buddy list with statuses, changing between away and online, sound notifications, and popup notifications.
This client is waiting to be put on the installer.app directory, but until then, you can put it on your phone through their website. Also, if you're a developer, the program is open source, so feel free to have a look at the code and see if you can improve it.