Chase has been doing this for months and other banks have been doing it for years but Paypal will soon accept checks via iPhone and iPod touch camera. Chambers said that this "new app will allow you to take a picture of the front and back of a check with your iPhone camera, and it'll be added to your PayPal balance."
The Square iPhone app is taking a bigger step by eliminating the check altogether but you'll need to purchase a little piece of hardware for that. Paypal only needs your iPhone camera.
Download: PayPal App (iTunes link)