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There was no application that let you use your iPhone as a USB flash drive. Sure there are many applications in the App Store that allow you to use your iPhone as a network storage drive, but all of them require an network connection over wifi. Developer Dmytro has created the USB Drive app which allows you to use your iPhone memory as mass storage device. And there is more to this app then any other app on any other mobile phone. You can create multiple virtual disks for use as USB Mass Storage drives by allocating some of your iPhone space to each partition. Sadly there is a down side to this. You need to jailbreak your iPhone to use this app. Apple has not or will not approve "USB Drive" app for sure.

To use this app. Add repo http://apt.dmytro.me in Cydia sources. Find USB Drive application in Cydia and install it. After installing launch USB Drive and “Create Disk”. Select your USB Mode (default is suggested). Reboot your iPhone and plug it in you computer USB port to use it as USB Mass Storage Device.