If you wonder why it was so important to have VLC removed, it's easy. As the much hated iDon't list says Apple locks all apps with DRM protection, free or not, open source or not. Thus with Apple's mockery over the open-source community, goes the only decent video player in the App Store. Yet again iPhone users are left with a poor choice of video formats or painful conversion of their videos to the extremely poor choice of codecs available on the iPhone.
VLC is available on Nokia's N900 since late 2009 when the device was released (SMplayer as well) and is coming to Android although it is not to much awaited due to the fact that almost every format/codec is directly playable.
It's quite a shame that major software vendors such as Mozilla (Firefox), Opera (only mini version available for iPhone), Swype and now VLC are not considering iOS as a serious platform due to the twisted policies that seem to bring no benefit for anyone but Apple's corporate schemes of having complete control over the end user.