Currently an update to my iPhone application has been in review for over 10 days!!!
In that period of time I've been able to work out a few bugs and even add some small new features to my application. I know that it is possible to reject your binary, but I would rather go a head a publish my application then send apple a better version 1.1.1...
So basically my question would be if I rejected my apps binary and submitted one right after would my app get pushed to the bottom of the review pile or would I keep my spot in line (since I've already been waiting for 10 days)?
No, rejecting a binary and immediately resubmitting a new one will not maintain your place in line: you would be knocked back to the start of the queue. I base this on my own experience, having rejected and resubmitted binaries a few times in the past.
Now, you might be thinking: "OK, what about the expedited review process?"
I can share some experience with that: With my latest app, I was in the same position you were in but I decided to go ahead and release 1.0 and then submit 1.0.1 soon afterwards. When 1.0 was approved and released, Apple chose it for the "New & Noteworthy" section. All of a sudden the app was getting a lot of exposure—and complaints about a bug that I had fixed in 1.0.1. I submitted 1.0.1—and as well as a request for expedited review—which was approved. 1.0.1 was released about 24 hours later.
So, you'll have to weigh the pros and cons for your own app, but I hope this info helps. :)