[Have had to edit my previous review. They have just removed the ability to run in the background while on the phone/Skype or listening to audiobooks, so it goes from having been my favorite app to having two stars. An iPhone that you cant use for anything else while the app is running makes it the most expensive monitor - and the most useless iPhone - on the market.]
Ive researched the subject of wifi baby monitors exhaustively, and have plunked down money on quite a few apps. This one couldnt be simpler to use, and it integrates seamlessly, of course, into the iPhone that I already have on me all the time. The audio quality is AMAZING, even when a fan, humidifier or air conditioner is running.
I havent run into the problems that other users seem to have, and although I use it nightly, Id say it disconnects maybe once every two or three weeks. About half that time itll reconnect by itself; the rest, I just have to reconnect on my end without having to go into my daughters room.
HOWEVER, it drains the battery like you wouldnt believe. Start with a full charge if you plan to be away from a power source for more than about four hours. (I have a year-old 3GS; the iPhone 4 will undoubtedly differ.)
I was able to use this app because I hung onto my iPod Touch after I got my iPhone. But it would be great if there were also a desktop version so that I could talk on the phone while using the monitor - and that way, people with only one iOS device can buy it too.
Murrfinn about Baby Monitor - WiFi & Bluetooth w/Background Audio, v1.2