Good idea, but...
I can see the merit in this if it encourages Councils to actually start doing something about badly repaired streets, but it's a bit of charter for people with "nothing better to do".
Of course, there are two big issues with this program:
The first is that the iPhone camera is so poor that the councils probably won't be able to see what the problem is, and the second is the fact that in the NuLab vision of a modern Britain, taking a photograph in the street is likely to get you banged up as a terrorist...