Ultimate Ears makes in-ear monitoring systems for professional musicians and really excellent earphones for the rest of us, too. Their super.fi 5 pro earphones ($249) have been amongst my favorites since I got them almost two years ago now, and the less expensive super.fi 3's ($129) aren't anything to sneeze at, either. Unfortunately, neither set is compatible with iPhone's dumb recessed headphone jack unless you're willing to pare down the plastic around the connector plug with your Swiss Army knife.
UE is now shipping the iPhone-friendly super.fi 4vi personal earphones. Based on the same outstanding drivers found in the rest of the super.fi line and a newly designed machined aluminum housing, the 4vi features an iPhone-compatible 3.5mm plug with an inline microphone and control button. The $150 4vi's aren't cheap, but they're on par, price-wise, with similar earphones from the likes of Shure and Etymotic Research, with the added benefit of a mic and play/pause button built-in.
If you use your iPhone for music on a regular basis and are still wearing the stock earbuds that came with it, do yourself a favor and save up for an upgrade. Apple's earbuds don't do iPhone's music player justice, and a set of quality "canalphones" like UEs will take your listening pleasure to another level - trust me.
Check out the super.fi 4 vi personal earphones on Ultimate Ears' from here.