Iterate when a system must be evaluated as whole and when its parts and the interactions between them are stable (like Version N+1).
When to Increment
Increment when a part of a system or an interaction between two parts must be treated like a whole in order to bring it to a consistent state (like Gall's Law).
When to Prescribe
Prescribe when the archetype of the whole system is well-understood and when efficiency or consistency are more important than feedback and fit (like Scotty, or MacGyver).