Yes - the jumpsuit, originally made of fabric with sensors embedded throughout it, was replaced by nano-technology stored in Tony's bones during the Extremis story arc. It allows the suits to sense subtle movement of Tony's muscles, similar to a prosthetic limb.
It's an old question, but I thought I would offer an expanded answer. The skin-tight suit you're referring to is what Tony calls the "undersheath". For years he has used one made of fabric that had tiny wires & sensors running throughout it. This allowed him to more fully integrate with the Iron Man suit, with the sheath acting much like the sensors on a prosthetic limb. It had to be put on the old-fashioned way, though, much like a tight-fitting wetsuit, and Tony often thought of it as the most time-consuming part of getting into the Iron Man armor:
In the Extremis story arc of 2005/2006, Tony found himself facing a biologically enhanced terrorist named Travis Mallen. He found, to his dismay, that his reaction time in the suit was just not fast enough to beat Mallen, who had been granted superhuman speed, durability, strength, and other abilities by Maya Hansen's "Extremis" process.
After being brutally injured during his first encounter with Mallen, Tony used the Extremis process to enhance himself as well. Rather than speed, durability, and strength, Tony enhanced himself to further integrate his body with the Iron Man suit. Perhaps the largest significant change was that he integrated the undersheath into his own bones using nano-technology:
Boasting a much faster response time in the suit, as well as a limited healing factor and the ability to control other technology remotely, Tony faced Mallen again with much different results. And although the Extremis process was deemed too unstable to mass-produce, Tony continued to build his future suits around this new cybernetic integration he had achieved by using it.