The work is usually done offline because you need to use the application when the phone isn't to the internet. This way, a customised start-up screen and a customised icon is made available to the user.
Most modern iPhones are compatible with browsers that support HTML 5. Tutorials on How to Make an HTML5 iPhone App are available over the internet. The task at hand is to create an application that is compatible with an iPhone.
The application could be built using any of the popular editors on the web like Notepad if one is using Windows, or Komodo Edit.