Not having to enter your password to update or to download free apps was a rumored feature in iOS 6. I could have sworn it was officially advertised or at least confirmed by Apple itself, but I must be mistaken. Anyway, it wouldn't matter if someone could download free apps onto your stolen phone.
If my iPhone were to get stolen I would wipe it. I'd welcome the option to disable appleid passwords for any app purchase, both MAS and iOS.Why you want disable ? That's protect your pocket
If you unlucky , get stolen or something , they purchase the app for $999 ( have some app on AppStore ) and what will happen to you ??