I predicted this problem the day the App Store was announced. The problem is that the price of apps would quickly approach $0.00. With prices well under $5, it seems it has. The reason this is a problem is that with those prices you will never see any complex software, just triveal, simple stuff. I work in software development and believe me you can't do anything serious for "only" a million dollars. $1M buys you only a few man years. Serious software requires a few dozen people on the test. Coders, quality asurance, graphic art, managment, tech writers and so on. and it takes more than a year to get any kind of product out the door. Who is going to invest 20+ man-years of labor on an app that sells for $5 per copy? No one.
So Apple invents a new store where the price floor is $20.
That address only 1/2 the problem. The other problem is Apple's control over what goes in the store. Who in the world would be nuts enough to invest 20+ man-years of labor knowing that their product might be rejected by Apple. If there is even a small chance Apple might reject it no one would risk a multi-million dollar project on a gamble like that. Anyone with that kind of investmant would want total end to end comtrol.
Put this all together and all you get a very simple, low end stuff that can be written with very little investment, by a few guys in a few months. The trouble with that is that even if you have a very good idea a few guys in a few months can duplicate your work and offer it at a lower price. Hence the race to near zero price.
If Apple wants better, more expensise apps they will have to give control over distribution to the developers and reduce their risk
Investers always think in termsif risk and return on investment