ShoutOUT TXT is a new app for the iPhone [iTunes link] that lets you dictate text messages to your iPhone and send them just as you would with regular SMS text messaging.

You set up an account and text away, using your existing contact list, or entering any phone number that can be texted. After a quick setup, I could see that the voice recognition was pretty good. The app is U.S. $0.99 and you get 25 text messages free. The catch is that you then have to make in-app purchases for messages beyond the free 25, paying $4.99 for 250 messages, or $1.99 for 50. At those levels, those rates are cheaper than the AT&T rates, so if you don't have a text plan, or are maxed out, it isn't a bad deal. On the other hand, AT&T charges $15.00 for 1500 text messages (with no voice recognition of course). 1500 text to speech messages on this app would be $30.00.

If you just want to send typed text messages there is no charge, which is certainly cheaper than AT&T. Since this app uses its own server, AT&T is bypassed.

It's a bit of a mystery how this app got approved. It certainly duplicates some basic functions of the iPhone, and AT&T can't be all that happy about it. It gets harder and harder to understand the app store rules, which seem to be in a state of perpetual flux.

Who is this app for? Heavy texters who don't have a plan now, or keep running over their AT&T allotment. Of course, if you want text to speech you can use Dragon Dictation, which is free and supports text messaging, but you'll still be paying for every message you send.

In my tests the app worked as advertised, with good recognition, and I was notified of incoming texts. If you are texting to unusual names, it probably won't recognize them, but you can edit any text before it goes out. I have a basic AT&T plan, and don't see the need to add something like this, but I think it would work well for some. I don't have any feeling on how reliable the servers that power this app are. If they are good, it could be a winner for many iPhone users.

The app currently supports North American English. It works on AT&T in the states, and on Bell Mobility, Rogers, and Virgin Mobile in Canada.

Here's an FAQ if you want to learn more.