Sounds reasonable enough to me. I'm a developer myself and I don't think I'll be doing it either. However, I could see people doing it as a way to put out a clearly-labeled free version to defray development costs and serve as a try-before-you-buy.
It depends on a lot of factors but at least it's an option and easy to add into an app if you want to give it a whirl.
This is how the Android market works (in a de facto, not policy sense) presently. I'm hardly putting up the Android market (it's terrible, IMO as someone who has an iPad and an Android phone to contrast with) as an example of it being done right, but I'm pointing out this is what the Android app developers have chosen to do when presented with the choices you're about to face as iOS developers.
Many non-free apps have two versions: Appname, Appname Free. Where the 'Free' generally implies ad-supported, if it's not outright labeled as having trial-esque limitations.
This works generally well, for me at least, as I find the ads wasteful (in loading time, CPU, etc. (I have unlimited data)). So if it's an app I use for more than a day or so I'll buy the premium version to support development and skip the ads.
I suspect this will translate over to the App Store in a similar way.