When touches Cancelled method get invoked in iPhone?

Note: touches also get cancelled if you start a UIView animation after touchesBegan. To prevent this make sure you include UIViewAnimationOptionAllowUserInteraction:

e.g.

[UIView animateWithDuration:0.3 delay:0 options:UIViewAnimationOptionAllowUserInteraction animations:^{
            self.aView.hidden = NO;
            self.aView.alpha = 1;
        } completion:nil];

I think probably the most common reason for touchesCancelled being called (since iOS 3.2 anyway) is following the recognition of a gesture by a UIGestureRecognizer. If your view has any kind of gesture recognizer attached to it then it is often very important to provide a custom implementation of the touchesCancelled method - note this includes ready made views that use gesture recognizers, including UIScrollView.

By default, gesture recognizers cancel the delivery of touches to the hit-test view upon recognition, although this behaviour can be disabled. This involves sending the touchesCancelled message to that view, most likely following a touchesBegan or touchesMoved message. If your touch handling code is relying on code implemented in the touchesEnded method, it is possible this may never be fired and some kind of serious problem could occur, hence the need to properly tie up any loose ends in touchesCancelled.

The ins and outs of gesture recognizer functionality is obviously a bit more complex than I've mentioned here - I would thoroughly recommend reading Apple's Gesture Recognizers documentation.

Also, check out the WWDC videos on gesture recognizers (starting from 2010).