Because it's fun and 1.2 million + 30% people think it's worth $1? How is it not worth $1.2 million? If you think it's easy to pull off a Flight Control success on the App Store, you should do some more research. There's a lot more duds and guys making $3 - $4 a day than there are Flight Controls. Are you arguing for a cap on what any one person's couple of month's worth of effort can earn them?

Why do you think an iPhone game shouldn't be worth at least $1? What do you think it should be worth? Someone spent a couple of months of their time developing that application, I for one am very glad there's finally a platform where their creativity can be rewarded by cash going directly into their hands rather than the hands of some publisher or other 3rd party that did very little to produce the product. I think you're being a snob to state that spending $1 on a game that entertains you for hours is frivolous. Did you buy a coffee today? You could have just drank free water you wasteful spender. What a preposterous statement.

That's an entirely different can of worms though, and I think would require a HUGE legal struggle to argue in court. I doubt they'd pursue that for ~$12,000 as the one user settled for.