I have my WIP at 960x640 (the high-res before they changed to the different ratio for the not-so-newest iPhone).
Basically it really depends on whether you are going to use the percentage or virtual resolution system of display setup/coordinates.
With the percentage system, everything is addressed as some fractional value between 0 and 100. You can set the aspect ratio so that your images sort of display properly. But you lose the pixel perfect placement and detection. In theory, you don't have to worry about the actual resolution of the device. But in practice, at least from what I've heard in this forum, there can sometimes be issues with how graphics are squished or stretched.
With the virtual resolution system, you set a specific resolution (like 960x640 for my landscape WIP) and all of your positions and points are some value within those ranges. The AppGameKit will fill the target device as much as possible, expanding or contracting to make sure that it can 'think' in terms of the resolution you set. If the aspect ratio of the target device is different, than you get black bars either above/below or left/right of your actual app. And you can do things to fill those using SetScissor(0,0,0,0) (which allows you to draw outside of your defined resolution (left or above would be negative values). In this mode, your graphics always maintain the display ratio that you create for them (unless you deliberately change the display ratio of a particular sprite). The downside on this one is if you decide to change your resolution. Then you need to make sure that your code takes into account the new resolution (and there are ways to handle this in the initial design). Changing the resolution after you have created your graphics also affects how they appear.
I have tested my WIP on devices that range from 480x320 (smaller than my designated resolution) and the iPad 4 2048x1536 resolution. And it works fine (and looks pretty good). On the smaller device, the text is a bit more difficult to read for the one I created, but it is readable. And the game plays just fine on everything.
Basically, assuming virtual resolution, you are better with something at least at the iOS 4.0/5.0 resolution of 960x640, than going for the lower 480x320 resolution. The AppGameKit engine will shrink as necessary to fit the smaller resolution and expand to fit the higher ones.
This page gives you info about all the resolutions, including aspect ratios, for the Apple iOS devices.
Cheers,
Ancient Lady
AGK Community Tester and AppGameKit Master