I compared the different TargetConditionals.h (included in SFML/Config.hpp) on my system. Apparently, the one in /usr/include (or in 10.9 SDK) reads
#define TARGET_OS_MAC 1
#define TARGET_OS_WIN32 0
#define TARGET_OS_UNIX 0
#define TARGET_OS_EMBEDDED 0
#define TARGET_OS_IPHONE 0
#define TARGET_IPHONE_SIMULATOR 0
the one in /Applications/Xcode.app/Contents/Developer/Platforms/iPhoneOS.platform/Developer/SDKs/iPhoneOS.sdk/usr/include/TargetConditionals.h reads a little bit differently
#define TARGET_OS_MAC 1
#define TARGET_OS_WIN32 0
#define TARGET_OS_UNIX 0
#define TARGET_OS_EMBEDDED 1
#define TARGET_OS_IPHONE 1
#define TARGET_IPHONE_SIMULATOR 0
and of course the one in the iPhone Simulator SDK reads
#define TARGET_OS_MAC 1
#define TARGET_OS_WIN32 0
#define TARGET_OS_UNIX 0
#define TARGET_OS_EMBEDDED 0
#define TARGET_OS_IPHONE 1
#define TARGET_IPHONE_SIMULATOR 1
Now, I haven't tested but I guess setting correctly the SDK to use would fix this issue.
@smartly, how did you set up your project?