I do feel that Google is sending out the message, that "your" app will do better in sales, if it's provided for free. I don't think it's healthy for a developer who wants to start a company writing Android apps. This is what gruber is saying (at-least a bit). Every app we write has a value to it. I don't think 99 cents is the right price but free is definitely wrong. What happens when someone writes an app that blocks ads on the Android phone. Now, the developer is not making any money from his free apps. If giving things away for free becomes the norm in the Android app store, then it will end up hurting the developer and Google in the long run.

There is a safety net to selling an app for a price (not free), because the sales give an indication if the users like it or not and where to direct the energy.

Also, 37 signals doesn't believe in giving away apps for free.