
A few things do work differently - you buy the books via the web site, using Safari (most likely due to a restriction from Apple, which doesn't allow buying content via an App). Also, you cannot yet make annotations/notes on the iPhone (but you can do standard iPhone screen captures, see below), simply due to the differences in hardware. You can, however, create bookmarks and view the annotations and bookmarks made on the Kindle. For most books, you are reading simple text and there are font size changes, just as with the Kindle. For books that include graphics, however, they can appear in full color (I tested this on The Clutter Diet and had blue tables, instead of grey), although there does not appear to be a way to zoom in on those graphics with the iPhone. You also don't (yet) have the ability to view personal documents or non-Amazon books. However, there are already other apps out for both of these uses, so you aren't losing any functionality (WhisperSync only works with Amazon's Kindle books, even on the Kindle, not on personal books or documents).
Get the Kindle iPhone app free and be reading your Kindle books on your iPhone within minutes.
To do a screen capture of your Kindle page on the iPhone: Hold down the Home and Power buttons at once, and a picture of the screen will be stored in the Camera Roll (under Photos), which you can then email or sync to iPhoto.