I have a guitar diagram app for Android that I am porting to iOS. Android has a embedded midi synthesizer (sonivox), so I can generate midi files and let Android handle the
Update: My answer is out-of-dated. @lukebuehler's answer is much appropriate.
If you don't mind non-opensource solution, try FMOD. Being a commercial audio engine for games, fmod equips a simple MIDI synth. I've tried the free evaluation version. It plays GM MIDI files correctly on my iPhone 3G.
If what you want is not just a SMF file player, you want a full function GS/GM softsynth, which can response individual midi events in realtime. You can try the midisynth from CrimsonTech. Its license fee is fair. Crimsontech provides several demo apps in the appstore. Besides, it also provides an evaluation SDK for free. You don't need to pay a penny for the license until you're really going to publish your app.