It seems like everyone looks stupid now. Apple for the annoying process of the app store and developers for wanting 99 cents/each for a "silly puzzle game that would have to be free on the web".
Now, what would happen if you had a big walled-garden where each user paid a fixed-fee for unlimited access to everything and each developer was paid per-use and by rating?
Sooner or later, this model (all-you can eat content for a fixed fee with some of the fee going to content developers) will replace the "free" web and app-store models. The web is close to this already but the fees aren't shunted quite enough to content developers.