Update 1: VLC is now available via Cydia. According to the latest tweet sent out developer Ryan Petrich. Just add his beta repo, http://rpetri.ch/repo to your Sources within Cydia to download VLC. Thanks Ryan!
VLC was released for the iPhone in late October of 2010. Soon after, there was confirmation VLC was going to be removed from the App Store as it violated the GNU public license (GPL) since app purchases have Digital Rights Management (DRM). The open source creators of VLC (VideoLAN) had conflicts with Applidium, the creators of the VLC iOS app. Primarily, it was RÃ©mi Denis-Courmont from VideoLAN that did not agree with Applidium.
RÃ©mi Denis-Courmont From the VideoLAN blog:
RÃ©mi Denis-Courmont actually works for Nokia. Maybe he feels a bit fuzzy inside knowing that he just managed to score a victory over Apple–and every user of VLC.Â I hope you managed to download VLC while it was still available.