PhotoStack Wallpaper Designer ($0.99) by Erwin Zwart is a wallpaper designer for your iPhone using pictures on your device.
There are plenty of wallpapers out there, but how about something a bit more...personal? Maybe you'll have to create something nice on your computer or something of that nature, but how about making something right from your iPhone? PhotoStack Wallpaper Designer will let you do that.
The first thing you'll see in PhotoStack is a background image (represented by the icon of a Polaroid-like photo). There are several to choose from within the app, or you can add your own from your Camera Roll/Photo Library, or even take a new picture. Once the background image is set, the real fun begins.
To add your own photos to the wallpaper, just tap the camera button. This allows you to either take a new snapshot or import pictures from your device photo library. You can add as many photos as you desire, with the ability to resize and rearrange the position of each photo on the wallpaper. A glow will be around a photo as an indicator of being the currently selected photograph.
The button represented by the line on the bottom toolbar allows you to adjust width of the border on photos and the color.
While you're working on creating your personal wallpaper, you can tap the gear icon for a wide variety of options. You can show/hide the lockscreen to see a preview of how your wallpaper will look in the end. You can also select a picture that is being covered by another image to the front (on top of others), or delete the selected picture or clear all images.
When your wallpaper is just the way you like it, you can save the image to your Camera Roll. The images end up being in high resolution for the iPhone 4 Retina Display, which is great.
If you're the type that likes personalized wallpaper images for using as the lock screen, then give PhotoStack a try. The app runs on devices with at least iOS 4.2 or later. For iPad users, there is an iPad specific version to use that makes use of the larger screen.
The iPhone version will cost you $0.99 (50% off for a limited time) and the iPad version will be $1.99.