I have an iPhone 4 and I hadn't even tried touring with it until this morning. In fact, it worked surprisingly well. Like my iPad, when I clicked on the CanalNow file, I was given the option of opening it in Google Earth, which I did. The result was slightly different, however. Two tours were launched: the first, an intro to Google Earth (which I had not seen before) and the second, running in the background, was the intended tour (which I didn't discover at first). To make matters worse, the pop up text boxes of the intended tour stayed up with the tour running behind them. Finally, I clicked "Done" and discovered that that applied to the text box, not the tour, which I had feared.
I'm not sure of the sequence, but when I discovered the first tour (about Google Earth), I exited out of it. Then I could see the controls for the intended tour and played it, retiring the text boxes as they came up.
The processor in my iPhone 4 is not as fast as the one in the iPad, so the playback was not as smooth, but it was quite credible.