We stumbled upon this app recently and think you will like it. Travel Voice Translator Linguatec was released on the App Store only a week ago and costs just $0.99. It is optimized for iPhone 5, but will also run on earlier versions of the iPhone, as well as on the iPod Touch and iPad. You simply speak into your phone and it will translate whatever you say into another language with an impressive degree of accuracy.
To get a better idea of how it works before you buy, here’s a useful demonstration of its capabilities.