The $99 Apple TV is technically the cheapest iOS device, with specifications similar to the first-generation iPad: an Apple A4 with a PowerVR SGX535 and 256 megabytes of RAM, running modified iOS builds from those on iPhones, iPod touches, and iPads. Officially, it exists as a media center settop box. Unofficially, it can run any iOS application on televisions or monitors, thanks to aspiring efforts from two developers.
According to MacDaddyNews, two developers (@stroughtonsmith and @TheMudkip) cooked up a method to run iOS apps straight from an Apple TV, without any intermediate workarounds such as using AirPlay. The solution was to get their app, MobileX, running on a jailbroken Apple TV. MobileX replaces Springboard as a window and application manager.
The applications run well and scale nicely to a 720p resolution, although given there is no touch-input method on televisions or monitors, the developers used a combination of SSH, VNC, and an Apple Remote to interact with their launcher and applications. Both official Apple and third party applications such as Facebook ran fine on an Apple TV.
The practicality of "touch-first" applications on a settop box may be limited at first, but perhaps with further tweaks to enable touchpad input, and offering a similar Accessibility setting to increase the size of text in applications, one can soon look forward to games and web browsing on a mere $99 device.