I once mentioned on a MPU episode that I use a small digital recorder with Dragon Dictate. Since then I've had a lot people asking which recorder I use. It's this one (Amazon Affiliate Link). I picked this up at an office supply store and didn't do a lot of comparison shopping. There are a few things I really like about it though. The USB port folds into the device so I don't need to find a cord when I want to download. The battery life is great and it is light in my pocket (plastic). It saves audio files to MP3, and my voice sounds great even when I record while walking down the street.
Why don't I just record onto the iPhone? The physical buttons make a real difference for me. I start and stop between just about every sentence. I also can turn it on and record virtually anywhere without looking at it. As an example, I'll often take a walk after eating my lunch and record into the Sony for later transcription. It's also great for diary entries.