Oosah, a photosharing site that launched back in April, has unveiled a cool new site for iPhone users. But the most interesting part of the site doesn’t have anything to do photos — Oosah will allow users to access up to 1 terabyte of any media for free, including music. That means Oosah site turns your iPhone into a 1 terabyte music player.

There are other applications that allow your iPhone to stream your music library remotely — Remote Buddy, for example. There are rumors that Apple is developing its own technology on this front. But unless you’ve got a 1-terabyte hard drive, Oosah’s player probably offers the most storage. (And it dwarfs the iPod proper, whose biggest model stores only 120 gigabytes.)

Of course, there are some drawbacks to streaming the music, rather than playing it directly off your iPhone. For one thing, Oosah chief technology officer Dan Khasis says that the player won’t work with music that’s restricted by Digital Rights Management (DRM) technology, i.e. many of the tracks available on iTunes. (Personally, I see this as another reason why DRM sucks, not as a knock against Oosah, but someone who owns a lot of DRM music probably feels differently.) For another, Oosah users must rely on the quality of their phone connections, which has been erratic on the iPhone 3G.

The music player seems like a promising avenue for Oosah, which also works as a meta-photosharing site: Its biggest selling point is its interface for managing photos stored on other sites. The iPhone site looks like a solid offering, with most of the regular Oosah site’s functionality.

The latest news makes me even more curious about how the Palo Alto startup plans to make money, which it has been secretive about. After all, storing 1 terabyte of data for each user can’t be cheap.