Unsurprisingly, it appears that iChatr users were doing what had become a tradition of sorts with Web counterpart Chatroulette - exposing themselves. From the blog post on SKJM's website:
The iChatr application has currently been removed from the App Store due to reports of a number of users exposing themselves during the random video chat sessions. We are currently discussing possible solutions to the problem with Apple. (This is why we can't have nice things.)
We have to say, it seems a bit absurd to block an app simply because of the way people use it. What is the defining point here? Is it a lack of accountability or is it simply the randomness of the encounter? We've already seen that the iPhone 4's FaceTime video chat will likely be the vehicle by which much adult entertainment is delivered - what will Apple do to silence this menace?
While others surely won't be disturbed at the disappearance of iChatr and its preponderance of (ahem) "dangly bits", this is one of those "it's the principle" situations. We certainly weren't rushing out to see or be seen, randomly, but we would defend others' rights to expose and be exposed as they see fit.
Apple's expectation to keep its iPhone pure and untouched by the unseemly goes a bit far in its reach. Blocking an app simply for the fact of one's ability to point a camera in a direction the company doesn't agree with doesn't make much sense in this age of Web 2.0, where everyone has the ability to produce, display and disseminate content. The same distribution of "inappropriate" material is easily achieved with the Facebook app or any number of other apps. Sure, apps like Facebook or FaceTime inherently involve people we know and implied consent, but then there is the rest of the Web - all scary and full of anonymous, unpredictable people who may, at any given moment, expose themselves in our general direction.