You read that right -- it took the iTunes Store a few years, but as Roughly Drafted has calculated, Apple's App Store is on track, even if growth stops right now, to hit a billion apps served up by 2009. Obviously not all of those are paid apps, but by any count, that's a ton of applications dumped onto iPhones and iPod touches around the world.
That said, the App Store is far from perfect -- Apple's approval process has come under fire lately for a lack of transparency, among other issues, and of course the iTunes Store didn't have the benefit of most of its content being free. Of course the App Store is working to get apps on phones, but there are lots of kinks to be worked out, including just how "open" Apple is letting the store be, questions of quality over the software that does make it in, and just whether it's worth developers' time to deliver these applications anyway.
Just as the iFund guys noted, however, we're only in the first few steps of a marathon here. There's a long way to go, but already, in terms of an iPhone software distribution system, the App Store is a huge success.