I had to look this up, because I couldn't figure out how iodine could act as a magical anti-radiation pill. Here's what I found:
The thyroid likes to collect and store iodine, it's like a little iodine bank.
Radioactive iodine is produced by fission, and is what would be released into the air by the power plants that are failing in Japan.
The thyroid can only hold so much iodine, and after it has been saturated, any extra is removed through urine.
So, basically, iodine pills keep the thyroid full of non-radioactive iodine, so any radioactive iodine is removed from the body as quickly as possible, rather than being stored.