Yes, this is a sufficient deterrent to stop Iran from developing a nuclear weapon because it shows that the world is keeping a close eye on those who attempt to build weapons of mass destruction. Iran knows what would come of a nuclear war and will therefore change their course.
No, it is not a sufficient deterrent. Iran knows that Israel would not use nuclear weapons willy-nilly. With nukes, there is mutually insured destruction. Once one nuke goes off, it will start a chain reaction and life as we know it will be over. This is why pointing nukes at other countries will not deter them from their actions.
Iran isn't stupid. They can look around the world and see the writing on the wall. If you don't have nukes, you are a potential target for the United States. If you DO have nukes, then you're taken seriously and have a seat at the bargaining table. If I were in Iran's position, I would be working as hard as I could to develop a nuclear weapon.
I'd like to believe that the threat of nuclear attack would be enough to keep Iran from developing a nuclear weapon, but I don't think that will work. Even so, I hope that no country is crazy enough to actually use a nuclear weapon against another. The consequences would be devastating.