What's to stop a developer from doing both? Charge for an App AND throw ads in the mix. Genuine question.
And why are ads the means to an end? Why not just charge for the app instead of making it free and poluting it with ads, thus ruining the experience of a beautiful ad-free environment?
I have no problem paying for apps and will gladly keep doing so if it keeps my iPhone ad free. But I dread that in the long term this will lead to where many other media forms have gone. First it's only the free apps, then the $0.99 ones. Before you know it you cannot pay your way out of them.
I also suspect that it could be used as an excuse to raise the overall price of ad-free apps in general.
I have never wanted to go near jail breaking. But if ads end up getting in my way I'll consider it fair game. I loathe ads in most of their forms.