The president responded with a nuanced reply, but explained, "Ultimately, the most important thing for the Iranian government to consider is legitimacy in the eyes of its own people, not in the eyes of the United States. And that's why I've been very clear, ultimately, this is up to the Iranian people to decide who their leadership is going to be and the structure of their government." (If you can't watch video clips from your work computer, Faiz Shakir posted the transcript of the exchange.)
The Politico's Michael Calderone was critical, not of the specific question or answer, but that the exchange took place at all: "Reporters typically don't coordinate their questions for the president before press conferences, so it seemed odd that Obama might have an idea what the question would be. Also, it was a departure from White House protocol by calling on The Huffington Post second, in between the AP and Reuters."
I can't speak to the traditional protocol -- the AP and Reuters deserve special placement? -- but I think it's unfortunate to characterize this a question "coordinated ... for the president." The White House realized Nico solicited questions from Iran, and the president apparently wanted to answer just such a question. There's no reason to think this was scripted, or that Obama knew the specific question in advance. The president knew it would be about Iran generally, with an inquiry from Iran, but that hardly makes this inappropriate.
What's more, let's also note that this was a good question, pressing Obama on a specific point he wasn't anxious to address. This wasn't a pre-arranged softball; it was the opposite.
If the Politico piece is any indication, there's likely to be a dust-up over this. That's a shame.