I actually use a first-gen MacBook Air 1.6/80GB for iPhone app development.
I use it during my half-hour-each-way train commute on weekdays. For portability, you absolutely cannot beat this machine. It's light enough (3.0 lbs) that you can almost carry it for "free" if you're already bringing a messenger bag or backpack.
The good news: It's usable.
Now, the bad news.
It's slow. Even simple tasks, like Xcode's autocomplete, are sluggish and really hit the CPU hard. The first-gen is also known for having a very slow system bus, which hurts the CPU performance even more.
Anything hitting the hard drive is very slow, like big compiles and initial launches of applications.
Most significantly, it's very uncomfortable to develop iPhone apps on the small screen (1280x800). You have room for a small code window, the simulator, and a few lines of console. It's cramped. Get ready for a lot of cmd-tabbing. And it's the same resolution as the 13" MacBook, so you can't get a larger screen resolution unless you step up to the 15" MacBook Pro or an iMac. (You technically can drive up to a 24" external monitor with one when you're at a desk, but screen-spanning on the Intel GMA950 is buggy and makes it even more sluggish. The new-generation MacBooks with the NVIDIA chipset are significantly better at external-monitor spanning.)
Fortunately, it's not the only machine I use for this -- I also use a Mac Pro at home with a 24" monitor. And I'm far more productive when using it, both because of its additional speed and the far more expansive screen resolution.
Primarily because of the screen resolution, I'd say the best laptop to develop on would be a 15" MacBook Pro (while still remaining reasonably portable -- so no 17", although its 24"-equivalent resolution is very tempting). And if you don't need it to be a laptop, it's hard to beat the value of the iMac line -- big screens with fast 3.5" hard drives. Both can be found with excellent deals in Apple's refurb section: specifically, you can frequently get a refurbished previous-generation 15" MacBook Pro for around $1300, or a refurbished 24" iMac for about $1500.