They need to improve selection, you're right. The press release for example mentions by name Eddy Mitchell. He's pictured on the Apple iTunes site as one of the ads in the store.
Guess whatthere's only ONE Eddy Mitchell track in the entire store.
There's One Nuttea track. One Lorie track. One Axelle Red track (and a two-song single she did with Renaud). No Gainsbourg. No Bruel. Different styles, different time periods, same small or non-existent selection.
Some artists do have some albums (lots of Piaf, some Brel, some Souchon). But it doesn't seem like there's many, if any, artists where you can get all of their material, or even a worthwhile portion of it.
I have 1400+ French songs from CDs I bought while I was there. That's probably more than iTunes has right now!

/
I'm very happy iTunes has launched, but to compete against other services and illegal downloads, I hope they improve the selection soon. Which means I hope French labels realize the potential iTunes has.