Dragon Dictation will do precisely that, but it's in the US store. It is a free app tho so you just need to create an account and download it. I had Dragon for a while on my 3GS, but unless that sort of thing is 100% accurate, you end up taking as much time correcting mistakes as you would txt'ing manually. I found it wasn't worth it but ymmv.
HI I recommend Dragon Dictate. It is easy to get (just google how to make a USA iTunes account) and it is very accurate....IF....you speak in a North American accent. Seriously, I'm not trolling, it's pretty straight-forward if you can do an accent. It's not as hard as it sounds, i do it for long text's or emails and it is about 99% accurate.
Vlingo is also quite good. An advantage it has over Dragon Dictate is that it can populate the to: field of a text message. It's available from the NZ store too.
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