Awhile back, we reported that the popular, open source media player "VLC for iPhone" was released in the App Store. It was a pretty big deal, because the VLC client duplicated a lot of functionality that was already in the native iPod app. (Apple doesn't usually like apps that duplicate the iPhone's native features.)
The biggest pro to VLC for iPhone was its ability to playback file formats that iTunes doesn't support. iTunes has a somewhat limited amount of video formats it can playback. VLC was a simple, free app that allowed more types of videos to be playable on the iPhone.
While it was nice for an app like VLC to be in the App Store, the media player was very buggy. Lots of users reported problems with playback and file format support. However, the bugs were not the reason that the app was pulled. In fact, Apple had nothing to do with the takedown...