The old uniform was too easy to duplicate, and easily available from unscrupulous clothing merchants. Criminals and terrorists would buy these fake uniforms, and use them to provide surprise and cover for their murders and robberies. The new uniforms will make it more difficult for these people to use police uniforms like this.
There is also a problem with real police moonlighting as criminals or terrorists (usually death squads going after former Saddam operatives, and Sunni Arabs in general). Other methods are being used to shut down the rogue cops.
In an effort to stop criminals from impersonating police, the U.S. helped Iraq develop a new uniform for the national police, and related paramilitary forces. The new blue-gray camouflage pattern is similar to that worn by American troops. The Iraqi police version will have Iraqi police patches and badges on it, and is more difficult to counterfeit than the old, more traditional, uniform.