I looked into this before buying a Mac Mini. The answer is, essentially, no. You pretty much have to buy a Leopard Mac to do iPhone SDK development for apps that run on non-jailbroken iPhones.
Not that it's 100% impossible, but it's 99.99% unreasonable. Like changing light bulbs with your feet.
Not only do you have to be in Xcode, but you have to get certificates into the Keychain manager to be able to have Xcode and the iPhone communicate. And you have to set all kinds of setting in Xcode just right.