Iris versicolor is commonly called Blue Flag, at least that's what I knew it as growing up. This one has variegated leaves, but the blossom is the same as the straight species. It is native to wet swampy places from Canada to Florida and west to Arkansas. We grow ours at the edges of ponds, or in low spots that tend to collect water, or even in mini-bogs that are just kiddie wading pools sunk in the ground and filled with a soil/peat moss mix to create a small swampy place to keep swamp loving plants happy. I know the people at K-Mart wondered what we might be going to do with 10 kiddie pools when we bought them.
One of my favorite versicolors is the photo above - 'John Wood'. We have a couple of clumps of this one growing under various conditions and all are doing well. The foliage (below) is also quite pretty in the spring when it first emerges.
As far a medicinal uses for the plant, it is the root or rhizome that is collected in the autumn and dried. Much care should be used if you consider using this plant for medicinal purposes since all parts of it are poisonous when fresh if taken internally. Still, it was considered useful as it was listed as an official drug for over a hundred years. It was used by the Native Americans who passed the knowledge of its usefulness on the the Colonists.
In addition to its uses as a diuretic, emetic, purgative and cathartic, the flowers yield an infusion that may be used to test for acids and alkalies in place of litmus paper. Some people have used the powdered roots in tooth powders.
So, a useful plant, though probably not one I'm going to use personally. Just being pretty in the garden is all that I require of my irises.