I like that Apple has published their guidelines in a very straightforward manner - that doesn't mean I agree with all of them, but at least they are being upfront about it. Also, I agree that since they are the retailer they do have the right to decide what they will and will not sell. Those crying that Apple will stifle innovation because of the fart apps line are far overselling their point.
If you make the case that your app sufficiently different and innovative there is no reason it shouldn't get past the reviewers and that is what the review board is for - if the Apple employee who happened to review your app made a mistake or didn't see the value in your app, you can appeal the decision to review board. However, the market is not a good decision engine if there is such a huge glut of apps that reviews become practically meaningless since they are spread too thin over too many apps and competitors trash each others products while overselling their own.
It is in Apple's best interest to let innovative, quality apps through the review process. It is also in their best interest to make them as easy to find as possible since they also make money on hit apps. Thus if you create the perfect note-taking app, they are going to let yours through and stop apps that merely imitate yours. True, they will make mistakes or they may draw the line further than you would like on how much innovation is necessary, but that is their decision as the retailer to make. They don't want to clutter their space with useless apps (more than it already is).
Maybe they'll get a better system than a manual curation and they probably will one day, but right now it seems very reasonable.
There's a difference. We see simulated violence on TV. We also see simulated sex on TV. They are used for dramatic effect and to tell a story. Porn is not simulated. You won't find any shows on television where people line people against the wall and shoot them in the back of the head with real bullets for laughs.
And when violence as entertainment does approach the level of porn - such as cage fighting - you WILL find plenty of people who don't want their kids to see it.
I'm afraid I disagree with you here. The level of graphic simulated violence you are allowed to show is far higher than the level of graphic simulated sex at the same rating level. TV and movie ratings and what is shown on network TV are examples of this. You can show lots and lots of violence and still maintain a low rating, but the ratings rise higher, faster for sex - and yes I mean simulated sex.
The trouble is that it does not need to be pornography to be considered adult. For instance, someone was writing an app for the illustrated version of James Joyce's Ulysses which has explicit sexual content in it and it had to be censored for the iPad because Apple wouldn't accept it based on the no adult content policy. BTW, I'm not a huge fan of Joyce much myself, Dubliners was pretty good, but well ... I digress. There are other situations like that where something has adult content, meant for adults, but is not porn or war-porn (the violence version of porn). That's the kind of adult content people are saying that we're not being allowed to enjoy as adults with apps tuned for the iPod/iPad.
Now I still maintain that Apple does have a right to decide what it can sell and while I disagree with the family-friendly only policy, it isn't enough for me to jump ship. It is enough for me to complain to Apple about it, so that they change it. I just find it odd ... what is the point of providing parental controls, if you're not going to have anything on the store worth a parent blocking? Besides since they have access to the internet, you're still going to need to set up those parental controls anyway. And blocking adult apps on a curated store seems far easier than blocking internet sites with all the work arounds present for that. Further you can simply disable the ability to buy apps or songs or videos (which would require money anyway, these kids have their own credit card?). It just seems a level of redundancy on the app store that is unnecessary. I understand why they do it and that they are not a government censoring material, but I would still prefer that they allowed adult content on principle (again, note that doesn't mean porn, there are a lot of things which fall under adult content).