The Applestore is a great example. Prices are fair and afforable. In addition, many small ammounts can make for some decent money which will motivate a developer to go the extra mile, which will likely results in better apps. Then there is also the option of free without all the features and a paid version for the full experience. So, free apps will always be there and they should, but I would encourage fairly priced quality apps next to the free ones.

Any insight on your app in mind? : )

posted from my awesome N900