I tried to implement this. My original post is here
http://stackoverflow.com/questions/3297571/iphone-playing-audio-playlist-in-the-background
So after some testing I begin to doubt whether it's even possible. does anyone know whether it's possible to use AVAudioPlayer to play multiple tracks in the background? I myself haven't found apps that have this. What I have found are apps like pandora, that stream audio (and probably use one call to AVAudioPlayer)
THE SOLUTION
Just add [[UIApplication sharedApplication] beginReceivingRemoteControlEvents]; and some other tweaks. It's all here https://devforums.apple.com/message/264397