ISO is the disk image format used for games such as Shin Megami Tensei III: Nocturne, Digital Devil Saga: Avatar Tuner, Digital Devil Saga: Avatar Tuner 2, Devil Summoner: Raidou Kuzunoha vs. The Soulless Army, Devil Summoner: Raidou Kuzunoha vs. King Abaddon, Persona 3, Persona 4, Persona 3 Portable, Persona 1 PSP. Due to the games being printed on single-layer DVDs, a size limit of 4.7 GB exists for game ISOs.
Tools
UltraISO
There are many free programs that edit ISO files. However, a premium version of UltraISO is recommended for its reliablility.
PCSX2
For running the ISO, the PS2 Emulator PCSX2 is suggested. For recommended specs and settings, check this thread.
PPSSPP
As an alternative for PSP games, the PSP emulator PPSSPP is suggested. For recommended specs and settings, check the emulator's FAQ page.