Although I think it has the potential to be much better than Tap Tap Revenge, the prevailing iPhone rhythm game, MAJOR word of warning on Rock Band for the iPhone. It's virtually unplayable on the 3G. I assume it has been optimized for the touch, possibly fine on the 3GS, but this game is laggy as hell on my phone, and every single data call for things like email will grind everything to a halt making it impossible to play. I'd advise not purchasing the rather expensive game until they expressly fix this issue.
Beyond that, when it is playable: Rock Band for the iPhone is kind of fun. The vocals part is useless (the controls are sideways and awkward to use, they may as well have left it out), but the others are pretty good. This game bass, guitar, drums and the aformentioned vox.
There are a few usability issues: The hit-range of each note seems a little confined for a touch device, and the control scheme is a bit tiny (and I have small fingers, so it must be worse for most people), but the music is recognizable (unlike Tap Tap Revenge's muzak-esque shit) which is a plus. Also, the medium level is too easy, but hard is too challenging. I guess it's really NOT that good, but I see some potential, particularly in the guitar parts where you use more swipe than tap.
Some day, perhaps one of these music game publishers may actually use an iPhone for the first time and perhaps then they'll realize that there are infinite other control schemes that suit their game styles to try besides this tapping shit. Until then, I'm probably done buying rhythm games on the iPhone.