Huh? There are tons of apps with a free version and a paid version and/or paid upgrade. That's a demo / trial.
Not exactly. Apple doesn't allow actual demos, they're pretty explicit about this. "Lite" apps are the workaround and they tend to offer reduced functionality but are free- this can serve as a demo if it's easy to divide your app into "the intro stuff" and "the longer term stuff", for example by giving away the first few levels of a game- but cannot serve as a demo if your app doesn't have this distinction.
For example, I'm pretty sure that Apple will not permit a 30-day free trial, nor do they permit you to have functionality which is "disabled in this demo version." You can get around this to some extent with in-app purchases, but that's not quite the same as a demo.
At best, it's a very different way of monetising your software, and a way that some developers may not like. At worst, GP is right and it could compromise your ability to effectively market your app.