You're confusing only-having-AppStore with not-allowing-other-programs.
Of course the average quality of the programs is higher, because all programs are checked. However, allowing other programs on the iPhone, while still having the AppStore as an easy way to buy/sell programs, would result in the AppStore having a similar quality level, while enabling choice for both developers and consumers.
pro-consumers will likely install applications from other sources, but then they choose to get a potential lower quality application. The same is valid for developers. If you want to be able to get your app in the AppStore, you'll need your app to be of higher quality. In other words: you could also see the AppStore in this case as a quality level.
Again: having an AppStore should not exclude the possibility of developing/using apps through a different way.