I don't have an iphone and in reviewing Mike De Sisti's lemonade piece on kids selling lemonade a few minutes ago I was amazed at the quality of audio he got out of that phone.
I believe XLR is the best way. I have used it for both radio and television reports in the past. The quality of audio exceeded my expectations.
Oh yeah I use xlr all the time for my pieces but good to know that you can get good audio out of an iphone if your in a jam or all hell breaks loose and you're not prepared.
Hmm, I doubt there is a way to monitor the levels in the iPhone. But hey, the iPhone surprised me before ;-)