I believe I used to have it set that way but not sure what happened. But what I want to do is to not have to input my password every time I want to download a application.
With the release of IOS 6, all apps that you have purchased can be re-downloaded without imputing your password. The same can be said for app updates. Apps that you newly purchase still require a password.
If you're jailbroken, you can download PasswordPilot from Cydia. Automatically fills in your password for you in the App Store, all you have to do is confirm the download/purchase.
Not the safest way to go about it, but perhaps setting up a keyboard shortcut for it can help at least little bit with that (given that other alternatives might possibly be lacking).