In a native iPhone application it is technically possible to store files in the local file system, but only in a "sandbox" folder visible only to the application. Apple'e rule do not allow you to access arbitrary files in the dile system.
We have so far not implemented the ability to read and write files to the application's sandbox. As a an alternative, you can store data in a local database, as shown in this tutorial.
For best results, use the Firefox browser..