The 3.5" Jack connector is originally supposed to send and receive audio data. It means that if a connection is plugged in, the OS will automatically redirect all audio signals to it (with a few exceptions). Thus, you can access the data using the built-in audio processing APIs of iOS, for example CoreAudio and audio queues.
As an example, you can generate and receive signals of different frequencies, which can be used to control and get information from external devices (you'll need some kind of electrical engineering for this to work, though - filtering, separating control frequencies, etc.).