Two articles that I spotted recently about iPhone apps, one rejected by Apple (http://www.theregister.co.uk/2008/12/23/iboobs/), another (actually, a bunch of others) accepted (http://venturebeat.com/2008/12/23/iphone-fart-app-pulls-in-nearly-10000-a-day/).
While one might observe that the classiness of the Apple crowd appears to be long gone, the important thing is not that.
The ONLY way for a developer to release an app for iPhone is through the Apple store (contrast it to any other smartphone where any piece of software can be installed from any location, be it a PC, or the Internet, and anybody can build and release applications).
And for Apple to distribute an application, someone at Apple must bless the morality of its contents. In this specific instance, Apple decided that farting is OK, while boobs (even the covered ones) are not.
And this is why we cannot let Apple win in this game. Because if we do, we will be putting one company as a judge of what is appropriate, and what is not. And I don't think there's an entity in the world which is qualified to do this.