First, we're basing this off a vague message from the person whose app was rejected. Assuming it was about the lyrics, there are two likely causes. The first is simply that the person doing the reviewing made a mistake. The second is that it's fallout from the baby shaking app getting released and then having the wrath of the politically correct police come down on them. The problem is that the PC brigade is hyper-vocal and they are good at getting media outlets to carry their stories, thus they're really good at shitting on other people's parades. The people reviewing apps for release almost certainly are now erring on the side rejecting too many apps for content. You can buy The Downward Spiral from iTunes, so it's not as though Apple has a general policy against explicit lyrics. Apple's initial reasons for rejections were generally either "this copies our own software" or "you need to fix this and this and this", which are both terms I find acceptable (even though the first one is undesirable, especially to me as a full-time iPhone developer). With the exception of the app that charged thousands of dollars simply to show a picture, Apple has not been about censoring content (and that was one probably more about the high rate of returns). I think it's going to be a while before Apple comes to a reasonable solution to the baby shaking fallout, although the PC police have definitely tainted the App Store forever.
Uh, They used this excuse to ban the South Park Studios Application to view clipped content way before NIN and baby shaker