The top to bottom elegant design is one thing that's appealing about Macs to nerds. At the core of OS X is Unix and the legacy of NeXT. It's an absolutely wonderful system to develop for. That same core is in the iPhone. The walled garden isn't adding elegance, it's taking it away.
The interface guidelines exist for a reason. You can call this a walled garden but it's still a garden rather than an open pit into which anyone can throw their garbage. Homeowners associations exist for a reason... to preserve the value of the community inhabited by their residents. If you think they take away elegance come to Dallas in deed unrestricted communities and see what happens to the "user experience" in a neighborhood where any idiot can buy a house and turn it into an albatross or rent it out to residents who will trash the place into an eyesore. Ask the neighbors how much they appreciate their neighborhood going to crap and their real estate values dropping as a result.
If people can't meet the community guidelines, tough crap. They aren't likely to make MORE money by using goony ergonomics just because they think it's cool. They're likely to make MORE money when they are able to meet a common standard of elegance and excellence that will improve the overall user experience.
If the open pit works better then why isn't Linux the dominant operating system? It's free, it's open, it's extensible and yet it fails. Why? Because the average user is required to possess more knowledge to use the tool than the sum total of work productivity achieved. When the tool is itself more convoluted than the results of the work produced by it, this is a failure of industrial design and a failure of imagination.
It's different if you're paid by the hour to tinker and program... but most people aren't.
It's not mutually exclusive to have 300 medicore apps and three great apps. Isn't that the state of 3rd party software on Macs - heck, on PCs in general? There's lots of medicore apps that might each be used by a dozen people, and then there's superstars like Quicksilver, 1Passwd, and Pixelmator just to name three.
Have you ever heard the expression "One bad apple..." yada yada. Guess who gets the majority of the blame for that one bad Apple.
It's a different issue with PC's that may be running hundreds of Apps but such design would terminally clutter a form factor like the iPhone. The methodology, design, scope and purpose are of a different scale. I don't want 300 crappy apps and 3 good ones on a phone with limited resources relative to a desktop machine.
Also, there's the issue that Apple has partnered with a carrier with whom they may have restrictions because of the way in which carriers like to control the usage of their network and even the distribution of applications over their network which themselves do not, in normal operation, use the network (e.g. games). I don't think many on these boards have considered the complexity of the juggling act Apple is doing here... on the one hand trying to work within the screwed up system of US cellular carriers and at the same time trying to change the nature of that business model to wrest control away from the very carriers that control entry into that game.
Uncontrolled distribution won't prevent those high quality apps from being created, especially since the iPhone has that same elegant Unix/NeXT core that nerds love. If anything, strictly controlled distribution is more likely to prevent these apps from being created.
That depends on what ELSE the controlled distribution model offers. You forget that convenience goes a LONG way.
Look at the control of the iTunes DRM model. Now look at how many people said iTunes Music Store would go nowhere because the alternative is free music.
Well... not quite. The alternative is free music accessible through any number of P2P softwares that work inelegantly. By comparison, the user experience of iTunes is so appealing that Apple is now the #2 retailer of music behind only Wal-Mart. The premium people pay isn't just for the content, but for the user experience.
Now look at how they activate iPhone and distribute updates. How many people have EVER updated the firmware/software on the myriad handsets out there before iPhone? Now, it's all in one system and automated. If users liked the fact that iPhone meant not having to wait 45 minutes while AT&T futzes on their computers to attempt, and often fail, to properly activate your phone... if iPhone means that users do not have to recite incantations and sacrifice chickens just to get a firmware update installed... if iPhone means that users do not have to jump through fiery hoops just to put media on their phone... then I submit to you the controlled distribution of applications will, by and large, have a similar appeal.
The hindrances you perceive also come with some benefits... and frankly for the average user the benefits outweigh the hindrances. Also, these same hoops that developers have had to jump through to get more complete official support from Apple on the Mac end have paid off. Wil Shipley made many times more money distributing to a "small" contingent of Mac users than he ever did designing any number of kooky applications for the vastly ubiquitous Windows platform. Because Apple users have a more consistently appealing experience they tend to demonstrate a willingness to actually PAY for upgrades.
If openness seems attractive, then so does money. If it's a choice between developing free applications of unrestricted design and distribution for the Linux crowd that has a preconceived notion that every application should cost next to nothing, versus developing robust and elegant applications within distribution and design criteria for the Mac crowd who pays, and pays well, for the user experience... who do you think will make developers happier?
That being said, if as you say nothing will prevent people from making third party apps outside this system, I'm sure Apple knows this. I'm sure that it'll continue... and I'm sure that means this SDK doesn't matter because nothing will have changed for the developers who do not want to conform to Apple's guidelines.
Apple is simply covering their ass so they don't take the heat for poor designs that aren't of their creation... and they're absolutely right to do so. If you believe otherwise, then can I assume that you will gladly take full responsibility for any flaws in work performed by third party contractors on any piece of property you sell?