There are two main ways to create an optimised version of a website for an iPhone or iPod Touch (I'm calling them "iDevices" from now on).
One. Mimic native applications.
Create the entire site in one single HTML page and logically section it into pages and use a library such as jQuery to slide the correct content into view when required.
Two. Fit the dimensions.
Leave the website in it's multiple page format but style the interface of those pages to suit the iDevice screen size/resolution.Which one is right for you depends on a number of factors: How big is the website in terms of download size? Many database hits? Is it necessary to mimic the sliding panes of the native iDevice UI?
Which ever you choose there should be a mechanism to allow the user to choose which version of your website they want to view. It's just good practice as far as I'm concerned. The iDevice is touted as having a fully featured browser in (mobile) Safari and it's true. You can view any website (okay not Flash but that's a good thing) you like in its original form on an iDevice. Don't make decisions for your users.