iAd gives developers an easy way to run an ad-supported game/etc in the App store without the compromise in personal privacy (for the player/user) that comes from an ad network like Google's, that is heavily focused on highly targeted ads.

Not sure why they have an ad network probably so they can own the entire end to end stack and take advantage of the growth in mobile advertising.

And they collect your searches on iOS/OSX for Spotlight which is used to implement the web site suggestions features. Easy to switch off.