So - I am a registered iPhone developer (Having paid my $99/year). I have followed all the steps provided by Apple to get the provisioning and code-signing files. However, w
Since you are able to run the .app on your device, your problem might be that you have buildt it with your developer provision profile. That won't work. You need to build it with a distribution provisioning profile for App store.
Apple provides good information of how to do this, but I think the info is kind of hidden in all this itunesconnect/provisioning portal stuff... Check this link: http://developer.apple.com/iphone/manage/distribution/index.action . There you sould see two important points: "Create and download your iPhone Distribution Provisioning Profile for App Store Distribution" "Building your Application with Xcode for Distribution"
Good luck :-)