I don't think that's what the OP means, Steve. It seems more like he's referring to a custom spelling dictionary, like in word processors and system-wide spell-check.
The iPhone definitely has a custom dictionary, because it'll automatically add your all your contacts' names, as well as words that you commonly use. But there's no way to manually remove anything from it. (adding you can cheat at, by making fake contacts named with words you use)