That's pretty much how I see it. I have no problem with proprietary software (when it works!), although I prefer free software.

Potential sellers on the Ovi store will have to decide whether the cost involved in getting the required insurance is enough to make it less likely that they will make money at it. If not, so be it.

I understand Nokia's position. Requiring insurance is the only way to make the indemnification clause effective. The indemnification clause between you and Nokia has absolutely no effect on the right of a third party to sue Nokia. You can't contract away someone else's rights.

Smaller companies certainly don't have the financial resources to defend Nokia against an IP lawsuit, thus the insurance. Larger companies will already have general liability insurance.