Wish I had found this doc earlier for a project I just completed. So custom fonts can be embedded in iOS 3.2 as described in What’s New in iOS: iOS 3.2:

Custom Font Support
Applications that want to use custom fonts can now include those fonts in their application bundle and register those fonts with the system by including the UIAppFonts key in their Info.plist file. The value of this key is an array of strings identifying the font files in the application’s bundle. When the system sees the key, it loads the specified fonts and makes them available to the application.

For more information about the keys you can include in your application’s Info.plist file, see Information Property List Key Reference.