how to remove version of iPhone application from apple app store?
Short answer:
You can remove your app from sale altogether (by setting its availability date to be in the far future) but you can't revert back to version 1.0.
You'll just have to release 2.1 with a fix asap and put a note in the reviewer notes box saying that it's an urgent bug fix and requesting an expedited release (they may approve it quicker that way).
note that:
5 things to know about remove and re-sell app:
Once your app has been approved, its status will appear as "Ready for Sale" in iTunes Connect. However, your app may take up to 24 hours to appear on the App Store. When you choose to remove all App Store territory settings for an app, you will be removing the entire app from the App Store and not just a specific version. The app is automatically released to all App Stores, unless you decide otherwise by deselecting the territories you wish not to be published to. The app can be "Removed from Sale" by clicking on the "Rights and Pricing" button from the App Summary Page. Then click on the "Deselect All" button to uncheck all App Store territories. Click "Save Changes".
After removing all assigned territory checkboxes from your app in the Rights and Pricing section, the status changes to "Developer Removed from Sale" and your app will not be seen on the App Store within 24 hours.
To put your app back on sale, click on the "Rights and Pricing" button from the App Summary Page. Then click on the "Select All" button to check all App Store territories. Click "Save Changes".
After indicating your App Store territories to put your app back on sale, your status will no longer be "Developer Removed from Sale". Your app will reappear in the App Store within 24 hours as long as your app status is "Ready for Sale".
All binary updates must go through the approval process again, regardless of whether the app is LIVE in the App Store or going live after having been removed from sale.