So it looks like the old MobileScrobbler app has become the official Last.fm application. Since it has become "official" they are playing by Apple's rules of no apps being allowed to run background processes.
This means that the Last.fm app cannot scrobble tracks played on the iPhone music player!
However, the source code is available for the last version that worked on 1.1.4 firmware, here:
I just thought that I would bring awareness to this in case some kind soul out there was interested in porting this app over for those who miss the abilty to scrobble tracks on our Jailbroken phones.
Thanks for your time.