I am working on an app for a client where he will be showing it in a board from to a group of directors for a serious presentation. Because the iPhone is so small, it wouldn't make sense to have him demo the app on the actual device because no one would see anything.
Is it possible to have the screen output on a computer or tv so that everyone in the room can see what is going on?
Not unless you're Steve Jobs.
Use the emulator to demo the app via a laptop.
Then pass around an iPhone for the 'hands on' time.
If it's not a phone app, but suitable for the iPod touch, then buy a dozen of them to pass around as demos.
Its not exactly what you want but:
You cant pass the phone around, but in reality - you need to see the finger interaction anyways.
I wonder if an overhead projector would work - with the projector light turned off of course. Maybe the light emitted from the iPhone would be sufficient in a dark room?
You could demo it on the simulator.
Some applications for jailbroken iPhones exist to let an AV cable work in any application. The ones that come to mind are iPhone-TVOut (http://code.google.com/p/iphone-tvout/) and ScreenSplitr.
http://dragonforged.com/DFVideoOut.shtml
For outputting video off an App from the iPhone/iPod.
Demo of the software http://www.youtube.com/watch?v=upfTZRlszJo