My most frequently used App (does that equate to favorite?) is probably the App Store. I'm drawn to that like a flame looking for cool new apps to download and hope this is just a temporary thing having received my iPod Touch at Christmas.
Following the App Store, I like:
Stanza!
Kindle Reader
B&N eReader
GoodReads
Instapaper
iPhone Life
ESPN Score Center
LinkedIn
IMDB
FML and MLIA (shouldn't like these, but I do)
Epic Fail
Suduku
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