I think the market will end up bifurcated.
For my part, I try to avoid products that are priced free. I've looked at a lot of mobile software, and so much of it that's free is low quality or has a punitive pricing model. Free games with pay-to-play mechanics, for instance, tend to be designed so heavily around monetizing the fun parts of the game that the game isn't fun no matter what you do. These fundamental decisions corrupt the process. By trying to keep fun behind a wall, even the fun parts aren't as good anymore.
It's a bit better with productivity software and the like, but I prefer payment models that unlock all the features at once, rather than one feature at a time. One-at-a-time apps necessarily remove the interaction and synergy between features. Instead of making a set of features that seamlessly works together, you get a bunch of individual features that are less powerful split apart. Again, design decisions end up being made that undermine the making of a good product.
So I'll be paying for software. As a software developer (video games) myself, I feel that we deserve to be paid for our best work, and we can't do our best work while begging for scraps. You can't make the big, great games like Mass Effect or Dragon Age or Far Cry by monetising through small transactions. The $50-$70 you pay up front is for a whole piece of coherent work that wouldn't otherwise be possible.