When Steve Jobs announced the App Store, he made it clear that Apple would be happy to take on the costs of hosting and distributing free apps. I remember thinking at the time that he actually seemed to be pushing the idea of free apps.
Free apps helped launch the iOS App Store into having stratospheric numbers of available apps, and probably pushed down the overall price of many other apps as well. But there's no such thing as a free lunch, even on the App Store(s). Apps take time and skill to be developed, and one of the unfortunate side-effects of the App Store pricing is that many people now expect apps to be free or low-priced. When I was using Palm software on my Treo, I regularly paid $10-$20 for apps, including games. With very few exceptions, most iOS apps are priced well below that.
This is good for everyone, right? Apple gets to boast about a huge number of available titles, users get access to an incredible library of inexpensive software, literally at their fingertips, and developers get ... um ... developers get ... noticed? A fleeting chance for fame? The hope that they might have the "winning the lottery"-type luck of an app like Angry Birds and sell millions of copies of their $1 app?