^
Apple and Nokia have obviously been in negotiations for a while and Nokia offered terms that Apple found unacceptable for whatever reason. It could be that Nokia offered the same terms that they offer everyone else and Apple refused because they have some sort of levarage like their own patents involving cell phones or mobile computing devices. Or it could be that Nokia offered unreasonable or discriminitory terms.
In either case, it isn't a case of one company being greedy but rather both companies trying to maximize profit. It's just business. However, if this gets drug out into a multi-year legal battle both companies lose but especially Nokia who is spending time/money on a legal case rather than on producing a viable iPhone competator.
It seems right now, Nokia is not trying to compete with the iPhone. The N900 is out, and while expensive, it's a hell of a mobile platform. (Debian based OS, looks sweet!).