> Well, the iPhone runs on battery power, so yeah, the power supply is 
> probably a little unstable.

Not just that, but from a single voltage (the battery) several very stable 
voltages must be generated.  This involves lots of analogue components (eg 
how do you efficiently make accurate 3.3V, 5V and 8V lines from a LiPo 
battery that can be between 3 and 4.5V?).

> I'm thinking more about desktop PC motherboards. Why do *they* need so 
> many million capacitors?

Noise reduction, basically they allow everything to run correctly at much 
higher frequencies than would be possible without them.  It works two ways, 
the capacitors around each IC help to keep a smooth voltage level for that 
IC, ie shielding it from any noise on the power supply lines.  Also the 
capacitor then prevents a lot of noise being put back onto the supply line 
from the ICs.

There are also a lot of resistors on the signal lines, these in conjunction 
with the tiny parasitic capacitances cause a low-pass filter effect on the 
signals.  This also helps to reduce noise emission from the lines.

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