Due to the nature of iPhone/iPod touch development, developers are not able to beta test using the same methods used on other platforms. Instead, developers are forced to use what Apple calls "Ad Hoc" distribution so that Apps can be tested prior to submission to the iTunes App store. The Apple method requires pre-registration of beta testers. In order to register them you need to know their devices unique device identifier (UDID) and then create a mobile provisioning file - a security certificate that authorizes that unique device to run the App being tested. Erica Sadun, an iPhone Developer, has created an iPhone App called Ad Hoc Helper that determines the devices UDID and allows you to send it via Email.
You are limited to 100 devices per App using this method meaning you can only have 100 beta testers. The provisioning portion of the whole process is done using the iPhone Configuration Utility or the iPhone Dev Center website. The beta tester uses iTunes to install the .mobileprovision file and the App to be tested.
Apple's method has been murky thus far, however. Luckily, Craig Hockenberry from Iconfactory, has created a step-by-step guide that makes it fairly easy. Hockenberry explains that during Steve Jobs' WWDC Keynote the announcement of Ad Hoc distribution meant one thing to most developers: beta testing. Unfortunately according to Hockenberry the instructions Apple provided were difficult and not well documented hence his reason for creating this Guide while setting up a beta test for Twitterific on the iPhone.
He also explained that he was not sure that his Guide would be in violation of the Apple SDK NDA or not since this information is publicly available. As suchm we we recommended that you snag the file before it's removed from his blog.