TUAW has a nice post talking about why software is not free, and in fact linking to this simple list of why it is so. TUAW is also worried about iOS lowering software prices.
As a user, I like that. As a developer, I don’t. By buying software, you’re not losing money, you’re helping honest people keep doing what they do. Don’t look at software (especially games!) and think: “Why the hell does this app cost $0.99? It sucks!” $0.99 is cheap. $4.99 is cheap! You’re paying more for stuff you consume daily and which take very little time to produce. How about paying $0.99 for that game that probably took a few months to create?