This is a perfect example of a 'White Hat' hacker, someone who uses hacking skills to warn people about security vulnerabilities and hopefully prevent future hacks. He wrote a program that spreads automatically among iPhones and simply changes the wallpaper. This virus causes no damage, but raises awareness and will hopefully make people realize that their phones are not secure. It is kind of like a vaccine, a weakened virus that activates the body's immune system and prevents future infections.
The virus only works if you have deliberately removed Apple's security protection, and added an extra program, and failed to change the default password. Computer people know that this is stupid, but no matter how much advice or warnings you give people, they will not respond unless you give them a dramatic example.
Computer manufacturers really should change the practice of assigning default passwords. There are so many things that exploit them. Each computer or device should be shipped with a unique password that is printed in the manual. It wouldn't be that hard, and it would have the added benefit of forcing people to read the manual.