If you have iOS 5 running on your iPhone, it comes with emoji's to use in texting.
Go to Settings > General > Keyboard > International Keyboards > Add New Keyboard..., search for Emoji and check it. Then, you'll see the world icon on your keyboard when you're typing (not just in texts). Pressing on that world icon opens the emoji keyboard.
No need for a separate app. And, I can attest it works fine in texts.
Marilyn