Truth be told, it is a grey area. The AppStore is clearly not compatible with the GPLv3. About the GPLv2 it is more complex, because what matters is if the AppStore terms are stronger than the Application License. And noone except a judge can tell...
Therefore, we release on our website, videolan.org, both the source and the binary so that the GPL spirit is kept intact. People can modify their VLC, patch it, modify it and put on their iOS devices as they wish.
Thus authors of GPL software might have a basis to object to other people distributing their software through the App Store, even if full source is provided. ...at least, this was the rationale given by the FSF when they objected to GNU Go in the App Store:
That clause in the GPL seems intended to cover distribution of a derived work, where the distributor owns the rights to additions they have made.
Edit: IANAL
http://www.reddit.com/r/programming/comments/dfhyw/microsoft...