You need to add this Framework to Xcode.
Right-click on "Frameworks" > Choose Add > Existing Frameworks
Locate "AVFoundation" then choose Add.
If you want to add it manually, choose the other button and navigate to:
/Developer/Platforms/iPhoneOS.platform/Developer/SDKs/iPhoneOS2.2.1.sdk/System/Library/Frameworks/AVFoundation.framework/
Replace the iPhone SDK version with whatever you are building against.
Perhaps also see this answer: http://stackoverflow.com/questions/385530/missing-avfoundation-framework
Also, sometimes you just need to close Xcode, then clean and rebuild.