If I remember correctly, I am pretty sure it's implied he might be a little mentally slow, if you catch my drift. Though I don't think they play that off for laughs in a negative way, thankfully.

I'd have to go way back to when they first introduce him and read a few more issues with him in it afterwards to verify that, though, since it's been forever since I've read some of the earlier issues.

Edit:

Looks like in the short storyline Peter and Iggy first meet, Iggy was written using with some letters flipped alongside having random lowercase letters dotted about uppercaps, so I definitely think they were going a little overboard on the mentally slow thing. It kinda looks like the sArCaSm thing is more of a way to show he's still a little slow, but in a slightly less offensive manner.