Apple announced an iPhone SDK event to take place on March 6th and as anticipated rumors will fly high the next week on what the iPhone SDK will be like.

iLounge has it that Apple will control the iPhone application distribution via the iTunes store. Apple would be the Gatekeeper for 3rd party iPhone applications.
Additional rumors indicate that Apple would only release a beta version of the iPhone SDK next week.

That Apple would be approving applications is not that surprising as they are concerned with security. I am pretty sure though that there will be a path around the official iPhone application distribution via iTunes. The iPhone is already hacked and the SDK will just enhance the capabilities.
More details on iLounge and on Apple Insider.