That is correct - don't think in terms of dpi (that's for print), but pixel width.
For the iPhone screen width, which is 640px, use that as a reference for iPhone and iPod touch devices. It'll scale down for the earlier generation, and be just right for the later generation. If they turn the device, the graphics will still be acceptable.
It's so important to design your graphics with the highest size you can, such as 2000px. Then you can use them for iPad and other tablet devices later down the road.