This is a functionality that a lot of people have wanted ever since Blizzard released the iPhone app in the first place. While at least one other MMO company has planned to use the iPhone in this same way, Blizzard is the first to bring an extra subscription charge for the privilege. The extra fee will also allow players to access the AH on the Web from anywhere, and even without the extra charge, players can get notifications about when auctions are up or sold and browse auction house sales. The update is out now on the App Store, and the Remote Auction House service will be out soon.
One thing that the update won't bring (yet, presumably) is iPad compatibility -- this app is still only for the iPhone and iPod touch. Blizzard has been pretty committed to Mac development in the past, though, and it's still not out of the realm of possibility that we'll see an iPad offering from them. We'll have to stay tuned.