It's extremely easy to develop and test the app in a webkit browser, and then in the relevant phone simulators, and PhoneGap will very very easily wrap your web app into a native application - it also provides extra JavaScript APIs to access some hardware features, like the camera and geolocation and so on.
You can use any of the existing common mobile web app frameworks (I actually wrote about my experiences with several of them just last weekend: http://semantici.st/archives/223:ios-webapp-frameworks-round...), or do something entirely custom. You can certainly get a 'native enough' UI experience on iOS - I've not tried Android yet.
However, if you're planning to do anything that's really performance-limited this approach won't work. The performance is exactly as you'd get in a normal mobile web app, and if you're expecting to do, say, gaming or perhaps something complicated using the camera (like 'Layar' or 'Word Lens' type AR), you'll need to be writing native code.