Well for something I could essentially do by the way that I described, in my opinion it's silly to pay for. Even if it is approved, I'm sure a free app would be released if this developer decided to charge for the app. And sure, 99 cents isn't anything, but you could use this argument for any 99 cent app or songs. They add up quickly, and it's best to think before going out and purchasing anything I like that's 99 cents.
Not to mention there is already a flashlight built into the iPhone 4.
Try this: go to camera->slect the video camera and turn on the flash. Bam, free flash light.