I discovered today that I have a similar problem, even though I don't even have an iPhone app: someone copied graphics from my web site for his iPhone app.

So far I have contacted apple and the designer of the graphics to clarify the rights (designers provided the graphics but I don't know where they are from). Not thrilled, but I can't imagine just letting that person get away with it.

Although what the other comment said certainly applies: the quality of the ripped off app seems rather low. He uses some of my icons, but the rest of it looks ugly.

Anyway, would be curious to hear how your story unfolds.