Google announced they have brought street view imagery to the mobile version of Google Maps.
Since Google doesn't have an iOS app available for iPhone users, Google is beefing up their mobile version for them. Part of that is making available street views on their mobile version.
It works a bit differently than the desktop version. You simply cannot drag and drop a pegman on a street. You need to search for a local listing, like a pizza store, click on the marker on the map and then click on the pegman on the bottom right.
Here is a picture of the two steps you need to take AFTER you search for a local listing:
Then when you click on the Pegman, it will open a street view in a new window and not overlay it on the map:
Forum discussion at Google+.