The inner working s of the how and why Apple does some of the things it does with the App Store and approval or refusal of apps is one of the great mysteries of the world. It ranks right up there with how many licks it takes to get to the center of a Tootsie pop. What we do know is that the reasons for tossing an app out are vague a lot of the time and the developers often never really know why they were denied.
A developer submitted an app recently that took all the iAds that Apple has on the advertising network that you see in various places and aggregated them in one place so that users could see them all and called it Ads Tube. Some of the ads are interesting and the app seems cool enough so the dev had no reason to think it would not be approved. Surprisingly Apple reportedly said the app "lacked functionality" and kicked it out.
The real douchebaggery starts later when Apple launched the iAd Gallery, which is the exact same thing that they refused to allow into the App Store when Apple denied Ads Tube. This seems very shady to me. This comes right on the heels of Apple forcing Toyota to pull an app from the Cydia app store. It seems to me that Apple is really trying to see how far they can push things without getting in trouble.