Okay. The answers so far are NOT correct. For some reason, the iPhone SDK has been shipping as a Universal Binary for ages. So, yes, you CAN use a Power PC mac for iPhone development. I've done it and it's verrry dirty.
It's involved and a serious pain. It doesn't work all of the time and there are numerous bugs. It works well enough if you're ABSOLUTELY dedicated and ABSOLUTELY cannot afford a new computer.
Basically, you need to hack up the install XML properties in the installation package. Get rid of the "Intel" check javascript-ish code and/or make it always return true. This will enable the "iPhone SDK" checkbox in the installer.
Once you install it, you can use the SDK and cross-compile to ARM (iPhone processor). The simulator even works, but your milage may vary. My experience was so awful that I simply purchased an Intel Power Mac.
You'll need to hack up the install script for every update. This will involve converting the DMG to read/write beforehand. Editing some Javascript embedded in the XML installation package. Then, hacking up your build properties to get rid of "Native System" selections. It's actually very very painful.
You can Google "how" to do it in more detail. I do not suggest EVER releasing to the Apple store with this method. If you just want to play and get accustomed to the platform, then it might work for you.
Again, I MUST stress, this is very very unstable and totally unsupported. Please know what you are doing before you even consider attempting it.
Yes, it's possible. No, it's not fun.