The main point of this transfer is not whether this Iago kid is good or not. He doesn't cost a lot, so who cares if he doesn't succeed.
IMO, the main point of those kind of deals is to send out a clear message: that we care about young players and that we are dedicated to integrate them in our team. This can only help us sign the more talented youngsters of Europe, a bit like Arsenal did in the past years.
As we've seen with the last ditch transfers of the past few days, there's no way we can compete to buy world class players such as Robinho, Berbatov and whatnot. So concentrating on the youth market seems like a good plan. But that shouldn't stop us from buying, say, one world class player a year.