PDF parsing and rendering is a core feature of OS X and there have been several other vulnerabilities in the past in iOS CoreGraphics PDF components. Exploiting this one appears to grant complete control over the device. F-Secure says that in their testing the jailbreak PDF crashes both the Adobe and Foxit Readers.
The PDF appears not to do anything more than it claims to do, that is to jailbreak the device. But such an exploit could be used for malicious purposes as well. Based on videos of the jailbreak process, it seems possible that an attack could be devised which requires no user action other than visiting a web site, perhaps through an iFrame inserted on it. The attack could rewrite the firmware of the device.
Initial reports said that the vulnerability was in Safari, but this was incorrect.