I think the in-app purchase is actually a GOOD idea, so long as it's properly handled by the devs. Looking at the alternatives:
- Paid only app: Risky. You might not like it, and have to rely on reviews. From the dev's side, you get a much smaller number of downloads, fewer people see your app, so it's harder to make a living.
- Paid + free version: Better, but if you like it you have to download + install, then delete, puchase, download and install. Plus you lose your saved game (if it's a game). If it's a big download this is really annoying (and you end up with the unwanted free version in iTunes + your backups quite often..)
- Free with ads: Just generally annoying. Acceptable sometimes if it's an app you don't use often and don't really want to pay for
Then there's free + in-app purchase. You get to try it out, if you like it you pay and get the full version. Or maybe it's free but with ads, and you can pay to remove them. This is ideal to me.
Problem is, lots of devs aren't doing it 'right'. Some apps are totally crippled. Some are advertised as if they're the full version for free (I suggest reporting these to apple as misleading advertising). The most annoying is when it's the full game, for free, but the game is set up so it's impossible to get anywhere without buying something!
(And yes, I'm a dev, and no, none of my apps have any in-app purchasing at all.)