iPhone apps have always run on the iPad, though the experience has always left something to be desired. Even after the iPhone 4 made its 960 x 640 resolution standard, the iPad only ran apps in a small, 480 x 320 window — or pixel-doubled to fill the iPad's screen, which resulted in terribly blocky text and sub-par graphics. Fortunately, Apple has improved the experience of running iPhone-specific apps on the new iPad by enabling the iPad to use Retina-display resolution aspects. We just check it out and confirmed that iPhone apps now run at 960 x 640 in windowed mode and are pixel doubled to fill the screen.
While pixel-doubled apps will certainly look less smooth than apps designed for the new iPad's native resolution, it should be significantly clearer than pixel doubling on the older iPads. Touch Arcade has some great examples of the resolution improvement — pixel doubled iPhone apps on the new iPad look pretty similar to native apps on the previous iPads. While this is a nice upgrade for the new iPad, in some ways it was completely necessary. Using the old 480 x 320 resolution on the new iPad's pixel-dense display would make running iPhone apps an even worse proposition than it used to be.