Apple has deigned to allow apps that use your iPhone 4's LED flash as a torch into the App Store. Some cost money, others do not. Some are well-designed, some not so much. But they all pretty much work.
LED Torch Light won't win any design awards, but it's free, and for something like this, that's about all it takes.
There are already like 50 other torch apps available, most costing $US1, which look a lot nicer than LED Torch Light. I'm partial to Ultimate Flashlight, which sports a colour-customisable Maglite-style textured grip UI and an SOS mode that blinks the LED. If you're looking for something that gives you a little more control (though a little less visual polish), Actual LED Flashlight lets you change the speed of the flashing strobe effect.
Turning your iPhone into a little LED torch will undoubtedly be handy at some point. If you just want to be sure you have something to turn that flash on when the power goes out, LED Torch Light should suit you fine. If you want one that's pretty to look at, too, check out Ultimate Flashlight or one of the many other $1.19 options. [Actual LED Flashlight, Ultimate Flashlight, LED Torch Light]