items purchased IN an app (like new levels, dresses for virtual dogs, map packs, etc.) may not transfer among devices; our developer friends tell us they are absolutely supposed to transfer, but the effort to make that work is on the individual developer and Apple is simply doing a CYA here in the terms. If you have 2 iPhones with the same iTunes account, you can have the same app on both devices -- but you won't be able to reuse anything purchased in one instance of the app onto the other iPhone, nor are you guaranteed to be able to get all your In App content back if you replace your iPhone.
Also, note that "The Application Provider is solely responsible for In App Purchases." So if Stinky the chihuahua's sweater never makes it into your device, you'll need to hit up the guys who wrote the app for some refund or re-download or... something. It's not 100% clear on how all that will work, since we have yet to get our grubby, unwashed masses' mitts on the system, but Apple is reportedly leaning hard on developers to make sure In App purchasing works as advertised -- while making sure we all acknowledge who's responsible if something goes awry.
If you notice other changes in the T&C, leave 'em in the comments.