Many older homes have galvanized plumbing pipes in them. The original thought was they would not rust like black iron pipes. The problem was later discovered that they do rust but from the inside out. The oxygen in the water reacts with iron in the pipe and the same rusting occurs. If you turn a faucet on that has not been used for a while and the water is reddish in color you have the problem. The rust is not a huge problem but will effect taste and it will also diminish the water flow to the faucet and showers because of the reduction of the inside diameter of the pipe. The only real way to fix the problem is by replacing the pipe with copper or plastic pipe.