I was thinking about creating an iPhone app "front end" for one of our internal systems.
I suspect this will need to run via a Cisco VPN (connecting with a key code).
What are the options to do this on the iPhone?
Do you need to manually connect to a VPN somehow using the iPhone and then start the iPhone app?
Or can the app prompt users to enter their key code and then start the VPN session?
No, (as of iPhone SDK 3.1.2) there's no API provided by the SDK to manipulate VPN connections. The user will have to manually connect to the network.
While there may not be an API available to manipulate the VPN itself, as of iOS 3.0 enterprises can at least enforce hosts within particular domains be accessed via a VPN, and "VPN On Demand" can be used to turn on the VPN when a given resource is being accessed. Without the enterprise deployment tools though, I suspect you're out of luck.
It doesn't sound like the application will be able to have any insight in to any of this happening, though.