Depends what you want the iframe to be responsive to: to changes of the containing block or to changes of content inside the iframe.
If you want the iframe to adapt to the size of the containing block (e.g. user resizes browser window), you might want to add relative dimensions using percentage values to the iframe element, e.g., by way of a stylesheet:
html,body {
height:100%;
}
iframe {
width:80%;
height:80%;
}
For this to work, you also need the html and body set to 100% height, don't ask my why :-) but this magic just works.
Example: http://jsfiddle.net/4z2hn/
I'd like to add my personal opinion: Preferably, JavaScript should not be used to solve a layout issue. For that, use CSS instead. The power of the current CSS implementations allow for stylistic flexibility and provide design possibilities which where unavailable before. Only if all else fails, resort to a scripted solution.