Camera+ hits 2 million sales / Revealing details about in-app purchase sales
taptaptap.com
taptaptap.com
That said, I believe it's incredibly difficult to get yourself into a position where you're really making a solid income from your app on the App Store. With so many apps vying for attention you truly need to make your app unique and extremely solid or you risk being forgotten or never seen.
I think the best way to gain momentum is to be the type of app that can be advertised via word of mouth. I don't think I've ever seen Camera+ advertised anywhere (my memory isn't that great so maybe I have seen it) but the word of mouth in various forum posts is incredible. At least at the start this can really help. Once you have some traction and in the top 25 you get the benefit of some Apple advertising via the featured app section (hopefully) and sales take off a bit more for you.
I really think Android will never have this type of sales volume for paid apps. It is pretty incredible what Apple has done with the App Store, and what developers have done with it.
Also, look at those Daring Fireball prices in that blog post! I'm jealous.
I have sold ZERO In-App purchases so far, despite my downloads of the free version still going very strong.
Perhaps I've done something terribly wrong...
I would absolutely rather buy a separate paid version than pay in-app to upgrade a 'lite' version.
Apple lets you choose between Non-Consumable (feature unlocks, pay once, can redownload, etc. The one you are probably expecting), or Consumable (pay each time, like virtual currency / smurf berries).
Yet, there is NO WAY for the end user to know what it is until he tries to buy it a second time. (I actually could be wrong on this, since I haven't tried buying a Consumable IAP)
Apple should really not be approving apps that have Consumable IAP that looks like Non-Consumable.
My apps only use the Non-Consumable.
I think these practices are only hurting themselves, as I'm pretty adverse to downloading an advertisement that might deliver the app functionality promised nowadays. My Android phone has maybe a half-dozen apps installed that aren't published by Google. I've only had an iPad for a week, but it hasn't faired much better.
I can't say I've ever noticed the experience you're describing on iOS. Not even with "Lite" apps.
Edit: Another annoying practice, I purchased Angry Birds Seasons for the iPad, yet it still has giant in-app advertising for Bing between levels, that if you accidentally click it, it will try to change your Safari search provider.
It's the second free calculator in my search results when I search for "calculator".
Discoverability is not great but there are plenty of awesome apps on the App Store, some free but you have to be willing to pay if you want quality.
(The most recent version of my app which includes in-app purchases has been submitted for review, but hasn't gone live yet. Otherwise I would report on my experience.)