Needed to create a few new iterations for our Team Project today, so, I learned a bit on iterations and that creating them for a Team Project is a very simple, painless process.
Iterations: Provide a structural hierarchy for releases and/or sprints
Areas: Used to identify where you want items allocated, they split the project up. Areas can be any part of a project such as Database, UI or Testing. They can also be split up based on teams such as Development or Testing.
Iterations and Areas can easily be created and managed by using Visual Studio or through TFS Web Access
And from here you can Add/Remote Iterations as needed.
Areas and Iterations can be managed the exact same way through Visual Studio after connecting to your TFS by clicking on the TEAM -> Team Project Settings -> Work Item Areas and Iterations which will produce a very similar window to the previous: