It certainly didn't come as a surprise to Denis-Courmont who pointed out that Apple's ToS conflicted with VLC's GPLv2 licensing on October 25th when he sent a formal notification of "copyright infringement … to Apple Inc. regarding distribution of the VLC media player for iPad, iPhone and iPod Touch. VLC media player is free software licensed solely under the terms of the open source GNU General Public License (a.k.a. GPL). Those terms are contradicted by the products usage rules of the AppStore through which Apple delivers applications to users of its mobile devices."
His action did not go over well with some other VideoLAN, the non-profit organization behind VLC, developers. As Denis-Courmont wrote at this time, "Some people have commented that this will damage the project's reputation. Maybe so. Blame those who published and/or advertised VLC for iPad. The fact of the GPL incompatibility was already well known."
You might say that Denis-Courmont was saying that "Don't ask, don't tell" is not an acceptable free-software/open-source policy in dealing with restrictive app store ToS.
Section 6 of GPLv2 says: Each time you redistribute the Program (or any work based on the Program), the recipient automatically receives a license from the original licensor to copy, distribute or modify the Program subject to these terms and conditions. You may not impose any further restrictions on the recipients' exercise of the rights granted herein.
When the App Store terms prohibit commercial use, general distribution, and modification, these are exactly the kinds of "further restrictions" that are not allowed thanks to the last sentence here.
This is a crucial part of the GPL's copyleft. Without this section, it would be trivially easy to keep freedom away from users by putting additional requirements in a separate legal agreement, like Terms of Service or an NDA.
Section 6 is not legal minutia: if you take it away, the license would completely fail to work as designed at all.
Some VideoLAN programmers were very angry about this. In a follow-up VideoLAN mailing list post, VideoLAN association president Jean-Baptiste Kempf wrote, "With 'friends' like you, we don't need any enemies. If I understand correctly, the FSF new policy is to blow up communities?" Smith replied, "My analysis of the current terms talks about how the Usage Rules restrict distribution."
Many open-source communities will need to decide if they'd rather stick to the letter of the law of their free software licenses or work with Apple's App stores. I don't believe that Apple goes to any great trouble to check if iOS programs' software licenses are compatible with its ToS. I also can't see Apple making its ToS any friendlier to open-source licenses. As Apple has shown time and again, Apple's software policies all about control, developer freedom, as Adobe developers can attest, comes a long way second.
In the meantime, iPhone, iPad, and iTouch users can continue to use MobileVLC if they've already downloaded it according to Smith. The problem is with how Apple licenses the sale of GPLv2 code to users, not with how users use GPLed programs once they're in hand.