Phonto for the iPhone was released today. It is a free (ad supported) app that lets you place text and shapes on an image.
— More than 100 fonts are available.
— Text size is changeable.
— Text color and text’s background color are changeable.
— Items (balloons) are available.
I played with this for a few minutes and it was rather straightforward after I got used to how things could be moved and resized. The alpha (aka transparency) of the text could also be adjusted. I found the overall GUI a bit distracting (easy to see in video), but that is a minor issue.
Phonto exported full res images on my iPhone 4 with no problem. The one thing that seemed to be missing was the ability to rotate the text and balloon shapes. Perhaps that will be added in an update.
You can download Phonto for free on iTunes. You can do an in app purchase for $0.99 to get rid of the ads. Be sure to give it a try if you want to add text/balloons to your photos.
This video shows the basic functionality.