Some important and successfully executed software projects like Google Chrome and Mozilla Firefox are fine examples of both iterative and incremental software development.
I will quote fine ars technica article which describes this approach: http://arstechnica.com/information-technology/2010/07/chrome-team-sets-six-week-cadence-for-new-major-versions/
According to Chrome program manager Anthony Laforge, the increased pace is designed to address three main goals. One is to get new features out to users faster. The second is make the release schedule predictable and therefore easier to plan which features will be included and which features will be targeted for later releases. Third, and most counterintuitive, is to cut the level of stress for Chrome developers.
Laforge explains that the shorter, predictable time periods between releases are more like "trains leaving Grand Central Station." New features that are ready don't have to wait for others that are taking longer to complete—they can just hop on the current release "train." This can in turn take the pressure off developers to rush to get other features done, since another release train will be coming in six weeks. And they can rest easy knowing their work isn't holding the train from leaving the station.<<
