There is no general color management support provided by the system. This means that any embedded ICC profiles will be ignored and the iPhone’s own device color space will be used to display the images instead.
To achieve the best possible display of your images, they should be saved in the sRGB color space since this most closely matches the iPhone’s native color space. It is not 100% coverage, but it is as close as it will get given the limitations of the device. Images saved in one of the more common photo color spaces such as AdobeRGB or ProPhoto RGB will look muted or off-color, much as they would if viewed under most non-color-aware browsers on the web.
Test image available here: Technical Note TN2115
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