To be honest I feel that this is very pathetic on Cisco's part. They say that they are wanting to protect their own trademark when the name is an obvious copy of apple's main franchises.
It's like the people who buy domains like w.ps3.org (outdated link removed) and things as soon as the ps3 is announced simply so they can sell them on to people who actually want to make sites.
Although they do have a product it's a pretty crap one which doesn't really deserve the name.
The trademark dates back to before Apple began using the iName branding, and that practice, putting a lower case i or e before a product name is hardly an Apple invention. It seems that Apple users can be somewhat insular in this regard, not knowing much about the industry as a whole, and then end up thinking Apple is being copied by companies that had products and names out prior to Apple making use of something similar. Just because Apple has two successful products using a certain naming scheme that they didn't originate doesn't mean that they are entitled to any other similar name now.
Cisco is a large, well established company that is worth many times over what Apple is, so they hardly need to resort to any backhanded tactics to earn a little extra cash. The truth is Apple had asked for the trademark and was in talks with Cisco for a license when they just decided they'd use it anyway, claiming that they were different products and wouldn't compete directly. Now Apple has had good luck bullying companies in this fashion before, but I seriously doubt that Cisco will roll over and take it. First of all, Apple has much more to lose here than Cisco, and already Cisco can claim damages for dilution of trademark due to Apple's actions-- first negotiating in bad faith and then making a major announcement when they had obviously agreed that Cisco owned the trademark (implicitly, you wouldn't be in talks to buy the rights if you didn't think that they owned the trademark, would you?) And since Cisco (Linksys branded), already has an iPhone product on the market, they are obviously using the trademark, aren't they?
In particular, I see a real problem due to one simple fact. The iPhone (Apple) can run dashboard widgets, and there is a Skype widget available. Couple that with the built in 802.11x and you've got Skype phone functionality, which is what the iPhone (Cisco) is-- a Skype phone. Apple is competing directly with Cisco, using a trademark that they don't have rights to, but Cisco does, and has had rights to since before the iPod was ever invented. Do you think that's going to fly in court?