Not everyone has updated to iOS 5 or even iOS 4; there's more than a handful of users who still run iOS 3.1.3 on their older iPhones or iPod touch devices. As of December 16, a growing number of these users are reporting problems with the iOS app store. It doesn't appear to be a bunch of confused customers, either; Engadget confirmed this problem with its own iOS 3.1.3 device.
A discussion thread at Apple's support forum details the problem encountered by users after Apple supposedly rolled out an update to the App Store last week. According to the report, the UI for the App Store appears to be in disarray: images are missing, buttons don't work and, worst of all, users claim they can't download new apps.
There's been no official response from Apple, so there's no estimate for when/if the issue will be fixed. If you're experiencing this problem on your older device, visit that forum thread and chime in with your personal account, or send feedback/a support request to Apple directly. Apple may respond when the number of people reporting this issue reaches critical mass.