Yes, and it works in many cases. It's one of the principles of agile development (Scrum, XP, etc).

>I read this definition of Iterative Development (definition #2)
>http://searchsoftwarequality.techtarget.com/sDefinition/0,,sid92_gci519105,00.html
>
>Anyone develeop this way? How is this done practically? Are distinct modules produced, or
>are features added on to the whole project at each iteration?