Sam, the developer, says that Apple didn’t want to reject it initially, but they were still trying to figure out how to organize these types of apps—the slightly lewd but not really full-on porn apps—into the marketplace. The Apple rep claimed they’d be lifting the restriction on more of these types of apps soon; the ones that were previously rejected for decency-type issues.
What are you waiting for? Download it from the App store, stat!
Us? We’ve been "rockin" iPootz from the Jailbroken Cydia store for months!