There was a point recently, where the ads appearing on iPhone.com, began to cross the line of someone simply looking to run a business, and someone who was clearly deriving profit from Apple, Inc's joint trademark with Cisco. The whole descent into ad-monger was detailed in a previous article, and is experted below. Apparently, Apple has finally caught up with them, and however it has been worked out, the domain name now uses Apple's nameservers, and redirects to Apple's iPhone website joining iPhone.org is Apple's iPhone domain name portfolio. It seems like this was only a matter of time, and could possibly have already been in progress when the ads began to show up last week.
Clearly, advertising competitive products under a trademarked domain name (ie. music playing phones), is NOT the way to go if you wish to keep your domain name. Odds are however, the previous owner has agreed not to discuss the settlement (or near-miss legal action).
You could really tell they didn't care anymore and were cashing in. Hopefully someone cut Mike a really really big check. "Cell phones that play music", how's that NOT going to set off alarms?