So do what every other computer platform in the damn universe does - let everyone publish applications and have the market sort out the good from the bad.
You seem to be missing something: I don't want to have to sort through piles of crappy apps in order to find a decent app. I'm perfectly happy to have an official "store" or "repository" that's rejected the malware, filtered the crap out, and told the developers to fix the bugs.
Chances are you posted this from a PC (in the larger sense, including Mac, *nix, etc) did you use an "app store" to figure out what software to put on it? No? How did you ever survive?
Amusing. As a matter of fact, I did somewhat use an "app store" of sorts. And chances are, so do you but you're just too arrogant/ignorant to admit it. You see, I downloaded the apps I'm using from a stable apt repository, which is vetted and maintained by volunteers of a sort. And they tell people "No, your app/project can't get into this repository until you fix @bug_reports or for whatever other stupid reason I care to name". But we don't see you railing against the Ubuntu maintainers.
After all, there's must be a billion useless or even actively harmful applications out there. The answer, of course, is that you're a grown-up who can decide for him/herself what to put on your machine. Why can't I do the same with my iPhone?
There's a couple
We've proven time and again that even grown ups don't have the common sense not to install malware (even that which actively announces itself as such) - even if they should (technically) be allowed to install "crap". The interesting bit is that "crappy software" colors people's perception of what they own. What would you think if someone said "oh look at my new phone" and you touched the screen and it crashed? Well you damn sure wouldn't buy it, and chances are they'd be really unhappy with it too. Thus, what Apple's doing by controlling all the apps that people put on their iphones is controlling the expectation that the phone *works* and works *well*.
Even so, the complaints about the app store really boil down to (roughly) three complaints.
1: I think Apple is draconian and evil and I want alternative/competing app stores! Well, let me ask you a couple of questions about where this leads. Are iphones going to keep working if people install random malware and broken apps on them? No. Is Apple going to make money off of the apps bought at a competing app store? No. Are there going to be entire "app stores" that distribute nothing but malware? Yes. Is this going to look bad for Apple? Yes. Should Apple do it? No. Is Apple losing money by not allowing this? No. Do they have any compelling reason to do it? No. Case closed.
2: I WANT OPEN SOURCE SOFTWARE AND LINUX AND GREP RA RA RA. Again, this comes down to Apple controlling the user experience and guaranteeing a positive one. I'm sorry, but this is not the year of the Linux desktop and really it's not the year of the Linux phone either. User experiences tend to be pretty poor: see the Open Moko for a prime example. While cool to geeks like us, it wouldn't be cool to a geek like my wife who just wants the damn thing to be usable and work.
3: I want to run an iPhone Botnet! Yeah, DIAF. The internet has enough of these.
But logic for why it's bad for the Apple, bad for the iphone, and bad for the consumer market in general won't convince you. You're too busy riding your high horse to realize that what you're demanding simply does not make sense. You're too busy to look where your examples really point: to things like Windows (malware-bug-land) and Linux (Virutally unusable hacker-only-land). I mean really, if you're going to demand these things then you already know that the iphone is not for you. Why must you spew your drivel and pester those of us that just want a usable working device with a good solid high quality app store?