If you really look at the characters, they aren't pushing an obscene amount of polys per character. It seems rather much in the realm of other games like Gameloft's or the upcoming Dexter game, albeit with slightly more polys. But those slightly higher poly counts on the characters are possible because the hardware isn't rendering the backgrounds in real time, so processing power can be more devoted to the characters.

http://forums.toucharcade.com/showthread.php?t=9744&page=3

Also, if you look closely, you'll see the detail isn't due to high poly counts, but rather greater quality textures than we've seen in many games on the platform (outside of Dexter, of course). The GPU used in iTouch/Phone is a PowerVR design, and those GPUs have always exhibited rather good texture capabilities. As for why the texture quality is so good…again, backgrounds are pre-rendered IMHO, which means more power for better detail on the character models.

But I'm no expert on this sort of thing. Perhaps the developers among us can give a better and more detailed answer.

What about the detail of the characters on the screens. Those have to be pushing a lot of polygons to have that kind of detail. I do agree the backgrounds could be a pre-rendered image, but the characters look to good to be true.