THe application store is supposed to allow independent developers sell their programs to peoples personal phones. So people can use their own phone, which they have payed for, for what use they want. Apple shouldnt have a say in all.
Why shouldn't Apple have a say? Isn't the App store hosted on Apple's servers? Isn't the only way to access the App store through Apple's iTunes software or website?
And you can use your phone for whatever you like. Set the camera to on, stick it up your bum, and take a picture and email it to sjobs@apple.com. They won't care, they won't send the cops after you, and they won't respond. It doesn't matter to them what you do with your phone.