Does re-iterate AES-128 with different keys gives any benefict?
The idea you describe is vulnerable to a meet-in-the-middle attack that work in approximately $2^{128}$ time and $2^{128}$ memory. The attack assumes knowledge of plaintext/ciphertext pair(s). Given a pair, you encrypt the plaintext with every possible key 1 and store those values. You then decrypt the ciphertext with every possible key 2 and look for a match between the two datasets. Say you find that $E_{k_1}(P)=D_{k_2}(C)$. Likely these are your two keys. This can be validated by looking at additional plaintext/ciphertext pairs. 

As codesinchaos says, the attack may not necessarily be applicable with realistic cost models, but it is a theoretical break and is therefore considered weaker than just using a larger key space in the first place. Also, I've got to believe that this idea is slower than just using AES-256.