It's true that the majority of the profits in App Store sales is focused at the extreme top, but it's not true that 99.999% of the rest make "near 0". This analysis estimates that the top 3,175 applications earn at least the average annual income for a US household per year, and applications that rank about number 6000 still earn $25K/yr.
And that's only counting App Store revenue. I've earned a lot more than average since I started developing for iOS, and most of the applications I've worked on are free. You don't see things like banking applications earn revenue directly, but the developers responsible certainly profit from it. The Facebook application is free, but you don't think its developers are working on it for free do you? I've been paid to built plenty of enterprise applications that will never appear in the App Store.
There is a huge amount of profit in the "app economy" that will never be accounted for merely by looking at App Store profits. The "app economy" is much bigger than the App Store.