(Since I'm kind of lazy, I'll start off by reprinting my answer from a thread on SO)
Recent scientific research has found that:
[A] target size of 9.2 mm for discrete
tasks [i.e., single-target pointing tasks] and targets of 9.6 mm for serial
tasks should be sufficiently large for
one-handed thumb use on
touchscreen-based handhelds without
degrading performance and preference.
Cited from Target Size Study for One-Handed Thumb Use on Small Touchscreen Devices (Parhi, Karlson, & Bederson 2006). Other sources agree on this "close-to-0.4-inch-rule" (e.g. Designing Gestural Interfaces (Saffer 2008, p. 42)).
Given the iPhone's pixel density of 163 PPI (6.417px/mm), you should preferably aim no lower than 59px diagonal for any target.
(Please note that this is verified for one-handed thumb use only.)
If you follow these guidelines the spacing can be eliminated.
tl;dr? It all boils down to the pixel density.