My guess is that they are making cash off of the App store, that they'd like to keep, but this isn't the point... If everybody uses their jailbroken device to install apps without paying for them, the incentive to develop for the iPhone kinda disappears.
No developers == no (or at least less) apps created without effort on the part of Apple. I think they must really enjoy the idea of sitting back, waiting to see what the unpaid minions will come up with... it's a nice position to be in, one which adds a lot value to their devices without any serious costs.
The incentive to defend the model is obvious. But I can tell you that when you develop an app that has a web-based component to it, and you find that the majority of your users haven't even bothered to pay $0.99 but really want to eat up your bandwidth and you can't even tell the difference between a legit and cracked app, it really makes you consider moving on to another platform. In cases like this, you're not just losing *potential* profits (which is debatable anyway), releasing the app is actually costing you real dollars... Double plus ungood.
For my part, I wish they'd throttle down the lawyers and focus on at least give devs a way to know which devices have actually bought the app. Wouldn't solve the cracked app install problem, but would at least avoid the case where you end up in the red because of server costs.
How come everyone's going so slow if it's called rush hour?