The problem here isn't necessarily the patent of the iControlpad, this is just a shot across the proverbial bow. I ran across a few tidbits of information while responding to a post for an indie-gaming dev group I work with.
The iControlpad requires a jailbroken iPhone. Jailbreaking is, in the official legal briefs of Apple, prosecutable under the DMCA as a copyright violation. The request for exception filed with the U.S. Copyright office by the Electronic Freedom Foundation is expected to be ruled on later this year. Apple is fighting any granted exception. If the exception doesn't go through the iControlpad, because it requires jailbroken iPhones, requires the law to be broken to be used. IANAL, though I'm sure there's technical legalese that would encapsulate the idea.
Throwing out this patent thing is a pre-emptive strike, since the exception is still under consideration it's questionable whether or not Apple can make any headway with the DMCA prosecution angle, they're doing this first.
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My first thought: Don't let this derail Pandora. Don't fight this to the point that they bleed you dry and other projects, like the Pandora, suffers. Between this snap-on gizmo for a closed-source device by a prickishly draconian company, or the complete pocket-computer that is built for and by the community, the latter is a far more impressive project (and the one I pre-ordered...)
Second thought: redesign it for the Droid. Apple wants to treat you like crap, take it somewhere else. I don't know how feasible this is, or what the audience for the Droid Vs. the iPhone are as far as people who want gaming controllers, but if Apple's going to fight you, why support them?