There are tons of great retro game emulators for the Android platform, put using the touch screen as a game controller is a lackluster solution. This fun electronics hack turns an old Game Boy into a case/controller for your phone.
Courtesy of Chad Boughton, this hack merged the guts of a Wiimote with the case of an old Gameboy. Just clip your phone into the bracket in the top of the Game Boy case, link the two by Bluetooth, and enjoy a beefier and more tactile controller for your games.
If you want the same experience without the destruction of a perfectly good Wiimote and all the DIY work involved, you may want to check out the MOGA system, a very similar (but commercially produced) system for Android phones–just make sure to download the unlock app to use it with the emulator of your choice.