Oh, the rocks in question are not the ones in your field, they're the ones in dungeons. They're about as tall as you, and look rather Rice-Ball shaped. The easiest place to get Iron is probably Green Ruins, followed closely by Whale Island.
Official "Debutante" of CMWABME CP: LittleBigPlanet, Fallout 3, Mirror's Edge, Street Fighter 4
I got my Iron in the Whale Island Cave area (the first area after you enter Whale Island). There are free-standing greyish rocks a little larger than your character that you can break. You'll get a lot of scrap iron, but sooner or later, you'll get iron. And don't get rid of that scrap iron. You'll need it to level up your tools later so they use less RP per swing.