You gotta start somewhere. Iowa is as good or bad a place as any. And it is small enough (apparently) to allow a less-financed/establishment candidate to compete and then launch from there. At least, that's the theory.
If either party started in California, Texas or New York (for example), the money candidate would have an even bigger advantage than currently exists. Romney's PACS have started dumping money into Iowa, we'll see if it helps him get over the 25% ceiling he keeps hitting.
"What, me worry?" -- Roy Williams