The uncertainty of the App Store is the number 1 reason I have not spent significant time and resources writing iPhone apps this year. I don't mind working on apps for other companies as a contractor, but it is discouraging to see what's been happening with the App Store.
I'm also miffed that Apple didn't get back to my iPhone development application that I submitted in February until August or September--long after "everyone else" had been able to test on real hardware and get significant sales traction. Apparently this is because I registered as a company. In July I submitted an application as an individual and got approved the same day. Thanks a lot.
When Apple has complete control over your destiny even down to distribution, it's hard to justify setting up an iPhone development house when the development costs have to be paid long before you can generate a dime of revnue--and with the App store, Apple can shut you down after months of development and no way to recoup those costs. It's a huge risk.