MMS service is now available on the iPhone since the 3.1 update. This will allow you to send text, photos, and videos when your using SMS messaging (text messaging).
To use MMS service, go to iTunes and click download and update iPhone. If that message doesn't pop up then click your iPhone in iTunes and click check for updates in the main window. After the update is complete power off the phone and turn it back on. You may be to reboot the phone by hand after the update.
Now you can send and receive photos, video and text with your iPhone built in SMS program..