@Bill, although Apple could potentially check the description of every apps, it's clear to everyone that it's not happening. Whether it's laziness or simply because the task would take a gigantic amount of resources I can't tell (I presume the latter, by the way). Putting the onus of advertising in-app purchase to the developer is pointless: if a developer is honest she would do that anyway, but if she's not, she will try hard to obfuscate the thing and she probably won't be caught. On the other hand, the App Store does know whether the app is in-app purchase enabled, so it wouldn't be difficult to show that to the user in a clear and unambiguous way.

Having a separate category would not prevent in-app purchases to be used in free apps. Simply, instead of being "Free" apps, they will be "In-app purchase" apps with a base price of $0.

@Martin: I don't understand what you hate about my suggestion. Could you be more specific, please?

Anyway, thinking at in-app purchases with the attitude "I paid for the damn thing, you want me to pay again?" is reductive to say the least. It's a different business model. For example I may release a game with episodic content. As a small developer, programming all episodes before shipping is a great financial risk, therefore the idea is to sell the game as soon as the first episode is finished and start getting some money and precious feedback while developing the rest of the episodes. Without in-app purchase I have to release several apps, one for each episode. This is very impractical for the user, because she will have one icon on the springboard for each episode and she can't easily share savegames between episodes. It's also impractical for me, because each time I make a new release, I have to upgrade all apps. With in-app purchase there will be only one app and it's a win situation for everyone.

Ah, and there are not just games in the world. Consider apps with subscriptions, for example to newspapers or magazines. There are endless opportunities.

@nevyn: We actually agree, but you probably didn't get my point. My point is that applications that allow in-app purchase should be clearly labeled as such in the App Store and put into a different category from "Free" and "Paid". The main benefit is that the user is made aware that more money will be asked to her to unlock/get some of the application features. This means that the only objection that created the dreaded "free-forever" policy in the first place is removed and applications could be priced $0 without any (reasonable) risk of cheating the user.
By the way this is what it's being done with game consoles: games that have an in-app purchase feature are clearly labeled as such on the game box. Now, in the App Store, you can't tell if a paid application uses in-app purchase unless you read the app description. But descriptions, as you reported, can be deceptive. "In-app purchase" is not a feature, it's a different business model, which should, IMHO, be recognized and clearly advertised by the App Store itself. My mentioning of the term "try before you buy" was probably misleading: every app with in-app purchase should be part of this new category regardless the "entry" price being $0 or $1 or $100.

I understand why Apple want to stick with the policy "a free app will always be free" and that's because there is the possibility for a developer to misuse the in-app purchase feature by luring users with free apps and then ask for money. One thing to avoid this could be to create a third app class between "Free" and "Paid", namely "Try before you buy" (better names are welcome) precisely for free apps with in-app purchase enabled. With that, application would be clearly labeled in the App Store, providing the correct information to the users and reducing room for misuse.