We have set the following app settings to be iPhone only, but in the App Store the app is listed as iPhone/iPad compatible.
As you can see in the following image, the device family is set to be just iPhones:

Here is App: http://itunes.apple.com/us/app/carrom-pro/id525961441?mt=8.
Is there anything wrong with these settings?
All iPhone applications can be run on the iPad as well, just not “fullscreen” (see image below). Applications can be designed for iPhone and iPad separately, or a universal app, which contains the resources for both iPhone and iPad (interfaces, device handling, etc.).
The user will notice a gray container around an application that is designed for iPhone. Universal apps will automatically choose the correct interface for the device.
In the iTunes Store, applications with a blue plus symbol beside the price are Universal applications: