You need to compile your library for Intel so the Simulator can use it (which I gather you have done already), and then compile it for ARM, so it can run on the iPhone. Then you have to merge the two libraries. There are different ways to accomplish that, or make it more automatic.
Here are some links to help you:
http://blog.stormyprods.com/2008/11/using-static-libraries-with-iphone-sdk.html http://www.clintharris.net/2009/iphone-app-shared-libraries/