One very notable example is Sword & Sworcery EP. The guys behind the game did a talk at GDC '12 about making games for niche audiences instead of stooping to the lowest common denominator, but I can't seem to find it.
Simogo has made a couple of very unique and artful games, including last year's Mobile Game IGF winner Beat Sneak Bandit. It's notable that their games are premium priced ($3), but still have hundreds of reviews.
Mika Mobile is a husband & wife team with a number of fantastic brawlers under their belts, including Battleheart and Zombieville USA 2.
Tiger Style is (in their own words) a "distributed collective of independent game developers" that have most recently developed the award-winning exploration/space-gardening game Waking Mars.
Jeff Minter releases a new iOS game what seems like every other week. (Though he once characterized it as "run[ning] frantically on the iOS treadmill".)
Zach Gage has made a number of small, fairly popular games, including SpellTower and Bit Pilot. ("Net Gross for me is probably around ~110k for 3 years of work. but the profits would probably be quite a bit lower than that")
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Notable recent failures include Punch Quest (F2P model didn't yield any income, so they switched to paid) and Gasketball (again, the F2P model they were using was too permissive).
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So, not a perfect ecosystem, but not an abysmal wasteland either. Enough for the kooky hobbyists to get by as long as their products are top-notch and their business model makes sense. (At least that's how I see it.)