The tap tap tap blog on the App Store:
iPhone apps are typically much smaller and more focused than desktop apps and as such, should be priced accordingly. In addition, you need to take into account the much larger market that you’re dealing with here… Apple is selling well over 10,000 iPhones per day and these are all potential new customers, plus all the existing iPhone owners and iPod touch sales.
This dollar store mentality even goes beyond the iPhone as most of the Mac developers we know have been experiencing significant downward trends in their software sales since the App Store opened. It appears that the “instant-gratification-on-the-cheap” factor has implications on the desktop, too. It’s going to be tough to compete with impulse purchases when you can get around 20 iPhone apps for what a typical desktop app costs.
What’s important to consider here is that we’re absolutely not suggesting that we feel that there’s no room for 99¢ apps in the store. We have no problem with discounted software. The issue is that the current situation punishes most who feel that their apps are worth more than 99¢, while rewarding those at 99¢. And this shouldn’t be the case
Personally, I don’t minding pay for an iPhone app. I estimate 40% of the apps on my iPhone were free. In the App Store, the general rule seems to be “you get what you pay for.”