Does apple allows me to change the wallpaper of the iphone from my application?
The public iOS 4.0 API so far does not allow changing any of the iPhone wallpapers programmatically. Undocumented APIs are not supported by Apple, so no, I don't think they would allow it.
However, technically it should be possible to do so.
Nope, no public APIs for it even with the latest SDK. You need to ask the user to save your image as a wallpaper manually.