They're figuring out the products just aren't worth paying for...
Uhm, no?!?!
Both iPhoto and iMovie are great apps and while Pages, Numbers and Keynote are not as powerful als full desktop versions of Microsoft Office, they are good enough for average users.
And I always though that the iLife-Apps are so good and so cheap (@5$ per app) that they are perfect (and almost free, now really free) demonstrations of the capabilities of an iPad.
I wonder why they giving Pages, Keynote, Numbers, iMovie and iPhoto, but left out GarageBand?
I think there are a number of reasons why some of the apps are free for new users:
1. Google and Microsoft are giving away basic office applications (Google Docs and Office Home&Student for Windows RT and iirc now also Windows 8 tablets). That's why iWork needed to be free.
2. Photo editing is now part of iOS 7 and has been part of some social network apps like Instagram, that's why iPhoto needed to be free.
3. iMovie - well, it hasn't any free competitors, but many people like editing movies, so giving it away for free will make a few people buy an iPad.
But why not Garageband?
I'd say that absolutely everybody has edited documents or photos in the past and a large number of people also regularly edit movies.
But much fewer people create music on their computer.
And while iWork and iMovie and iPhoto can replace all other devices needed to edit whatever file formats the apps can edit - Garageband won't replace a guitar, drums or a keyboard.
Giving away iWork, iMovie and iPhoto for free will benefit a much larger group of people and it will help them in a much greater way than (the still awesome) Garageband.
And of course, there's also no competition from Google or Microsoft in that category, so no need to match a price of "free".