Is there an iPhone app for this?
 

"There's an app for that"

The slogan for the iTunes app store/iPhone.

But, anyway, I was wondering if there was a WORKING camera app for the iPhone which could take a picture and decipher the difficult kanji, which works over wifi or 3G.

I've heard of "word lens" but it appears it's only for English-Spanish.

If there is an app like this please let me know, also I hope it's free. >.<

I've used an app called JapanGoggles for this before. I can't remember if there was a charge associated with it, and unfortunately it's not very reliable but it is the best I've found for what you're looking for.

I've used that one before and the translation you get is far from accurate. Like, it goes word by word but never gets the whole thing right. With kanjis it's all the more likely to mess up big time.