Re: why iodine solution is used when preparing a slide of onion peel?

A search turned up a previous MadSci question, in which the intent of the 
staining was to improve visibility of the normally transparent onion skin 
cells:
 http://www.madsci.org/posts/archives/oct2001/
1002637439.Cb.q.html
 

Also see:
 http://www.sidwell.edu/us/science/vlb5/Labs/Microscope_lab/
microscope_lab.html

Iodine binds to starch, which is a polymer of glucose that plants make as a 
way to store the energy of the sugar for later. The starch is made in the 
plants during the day, and then broken down for energy at night.

The onion skin cells don't contain a lot of starch, so they don't stain 
very strongly with the iodine. Potato, in contrast, will stain strongly. 
You might be able to use ink for the onion skin to improve the contrast, 
but inks are generally colloids, with very fine particles in suspension. 
These can be visible under the microscope, obscuring the cells. The iodine 
solution is cheap and widely available, and so is widely used.

More about colloids:
 http://
www.spaceref.com/iss/payloads/exppcs.html