But isn't this because selling upgrades isn't possible? I think selling upgrades would also make the AppStore more fun, as every major release would be an easy milestone to promote. SaaS is just so incredibly boring.
Upgrades are a different topic. Upgrades are if your app introduces new functionality or a new and improved version of the app itself. New functionality or not APIs still cost a developer a lot of money because it's data being accessed* that companies charge for. Most apps have some kind of functionality where they access data like this or have some kind of hosting they pay for. If everyone bought the app when it first came out and never bought it since but still used it the developer would go into debt rather fast.
*Just to give an idea how expensive this stuff is I had a coworker who had a popular but free personal app that used Googles Places API. He passed one wrong query into the API and because so many people used his app he ended up with a nearly $10k bill. Luckily he fought it and won since Googles documentation was conflicting and the docs he followed said it was free but had his app been using that API in the long run it would have been a massive cost he'd have to account for, hence things like subscriptions.