According to digitimes (paywall) http://www.digitimes.com/news/a20100526VL200.html

According to our sources, Apple had spoken with Samsung Mobile Display about the possibility for AMOLED panels since the development of the iPhone 3GS, but production capacity remains a big issue. SMD only has the capability to fulfill 50-60% of iPhone orders at the moment even it dedicated all AMOLED capacity to Apple.

Of course, cost is always a concern. AMOLED panels cost US$34-38. TN panels cost less than US$10 and IPS panels around US$20.

AMOLED also has display weaknesses. SMD uses PenTile technology developed by Clairvoyante to produce AMOLED, which is less suitable for displaying text. With Apple quite keen on pushing e-reading businesses, AMOLED may not be the best solution at the moment.