That is correct, only people with developer accounts can install apps on an iPhone. I couldn't say why this is the case.
Ah well, I guess I'll have to fork over that $99 when I want to install my own apps.
Also, if I install an app with a developer account, but don't renew it the next year, will my app still be usable, and will I be able to update it?
They used to ask for a credit card, but I believe that's no longer required (if it were, you could just use a prepaid gift card).