During the free fall the iphone is supposed to send acceleration values as 0 on all the three axis. So how to detect the distance covered by the iphone?
distance = 0.5 * gravityAcceleration * timeOfFall2
In the simplest form.
We can safely omit air friction and wind, given iPhone's form factor and weight as well as the distances which hardware will still be useful when falling from. ;)
However, if you're going with the phone into a free fall before opening a parachute, there are too many factors to count in to reliably calculate the distance, based on accelerometer itself. It is probably not suited for such applications anyway, as the readings are very unstable and its main purpose is to determine device's orientation or detect a potential free fall (in case of notebooks where similar accelerometer chips are used).