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ganesh: I get that argument, but Apple's solution ("free should be free") only makes the matter WORSE. See [1]; in short, say you download a free app, and you find out it's basically useless without making in-app purchases. Okay, annoying, but you've lost nothing. With the current situation, you've *paid* and downloaded for an app, *and* you find out it's useless without in-app purchases. Now you've lost money, and you're mighty pissed. How is this situation in any way better than had the app been free? It's already happening, see [2].
Re the "Try before you buy" (aka shareware) alternative: Devs have been asking for this since day one, but apparently it's nothing Apple cares for.
[1]: http://www.marco.org/127294959
[2]: http://www.techcrunch.com/2009/06/23/iphone-in-app-purchases-already-leading-to-the-dreaded-two-words-bait-and-switch/