If you've updated your iPhone to iOS 6, you've now got some new options when in comes to handling incoming calls. One of those options is to reply to a call with a text message. It's a great feature for when you're busy or in a meeting and want to let someone know you will contact them later.
When you receive an incoming call you'll see the addition of a telephone icon to the right of slight to answer. Slide it upwards.
You'll now see some more options appear. Tap the Reply with Message option.
At this point the call will be declined and you'll see some options for pre-made messages you can send or you can choose custom to create your own.
Tap the message you want and you're done. The caller will be notified via text message.