I have been contemplating this thread... and here are some basic thoughts:
Withdraw your application only if you are absolutly certain nothing would persuade you to choose Penn over Iowa, including things like a relative getting ill. I don't know your educational background (if you have always been IS, etc) which might make the distance to family more or less difficult for you. Also, be absolutly certain the costs are comparable enough, including living expenses and extras like traveling home for visits/holidays/etc. I would willingly move across country or out of country if I don't get an instate position, but I have done it before and have paid some high prices (like my grandfather was diagnosed with cancer and died before I could return home, and my other grandfather having a massive heart attack and being too far away to afford to fly or drive home.) I am not saying you should or shouldn't go to Iowa based on those types of things...just make sure your good with the potential issues (plus, perhaps you/your family can afford immediate flights and such if need be.)
Don't know if that makes a lot of sense, and I am sure it differs with individuals, families, and communities.
Personally, I would probably just wait till I knew if I was in or not, then make decisions....but I like to know as many of the cards in play as possible before making decisions.