A Caucus is basically an election in every state to nominate someone to become a presidential candidate for the up coming election.
What is so important about the Iowa Caucus and why is Iowa always on the world headlines is that out of all caucuses in the US, it always starts off in Iowa. Also, never in the history of the Iowa Caucus has there been a candidate who came below second place to become a winner in the overall caucuses.
In the case of the 2012 Republican caucuses, Michele Bachmann suspended her campaign after coming sixth place while others like Ron Paul (3rd) and Newt Gingrich (4th) still determined to fight on. With Mitt Romney first and Rick Santorum second, the race will very close.
However, the recent recount showed that Rick Santorum narrowly won.