This question is related to App review guide.
Use case: my app displays iAD and is free. I have a button to make the app ads free given the user pay a small amount.
Is Apple likely to accept this use case?
This is an extremely common method, and actually, Apple is starting to prefer apps that offer in app purchases like this rather than having two versions. Tens of thousands of apps are already doing this, so there would be no reason that they would reject your app if you do this. I have 2 apps in the app store that allow the user to remove iAds for 99¢.
One thing that Apple is a little bit picky about, though, is a restore feature, and If you have in-app purchases in your app, but don't have a restore feature, your app will be rejected by apple.
A restore feature is pretty much the way for you to get your purchase on all of your devices. Say we have Bob, Bob has an iPod touch, and an iPhone. While Bob is in your app, on his iPod, he decides that he would like to remove the ads, so he makes the purchase to remove them. Later, Bob gets on his iPhone to use your app, under the same iTunes account. Bob could simply press the restore purchases button in your app, and ads would automatically be removed on his iPhone, because he already bought the removal of them on his iPod.
To add a restore feature, all you have to do is:
[[SKPaymentQueue defaultQueue] restoreCompletedTransactions];
So, in conclusion, It is acctualy better if you have an option to remove iAds from your application. It allows your users to enjoy your app more, while also putting money in your pocket.