The sticking point was that the App Store's terms of service says that a piece of software downloaded from the store can only be used on five devices. But the FSF said that the terms of service impose numerous legal restrictions on the use and distribution of GNU Go that are forbidden by GPLv2 section 6:
So, the FSF is considering it not redistributable enough that an application is available for free via the iPhone store. The quibble is something about, the receiver of the software should be able to further redistribute the code for free, versus telling people that they can download it themselves from the app store.
In general, the GNU license isn't all that "free" in any common definition of the word. It seems pretty darned free to me if anyone who has an iPhone at all is able to download the software, run it all they like, and even go grab the source code. It's hard for me to see this as anything other than the FSF trying to get negotiating leverage and make itself more important. The problem is, their efforts to gain power are involving steps that are against their mission. To promote free software, they're seeking power, and to seek power, they're blocking the distribution of free software.
Open source is not for everyone. However, if you really want to give away software, it seems to me it should be given away in some simple, intuitive way. Either public domain it, or, if that seems too radical, use a clearly free license such as the MIT license.