The new Facebook iPhone Connect API makes facebook integration very easy.  Here is what I did to get the libaray compiled:

After downloading the Facebook iPhone Connection SDK,

1.Copy all .m and .h files under src to my project's classes folder
2. Copy the FBConnect folder into my project's root folder
3. Manually create the project FBConnect group in XCode
4. Manually drag all the files (2 sets) into the FBConnect group XCode
5. Compile and get like 170 errors
6. Go into project setting, in Header Search Path, click "+", add the path "." (Yes, just one dot)
7. Recompile and you should be fine.