I think it's a shame that you need to pay Apple $100/year to put a free game on their app store. It seems like some sort of special exception for open source apps would be reasonable.
But if Apple is hosting an app on their CDN and listing it in their DB they'd be losing money on the amount of work involved for handling all the free apps.
After that, $99 is not a big sacrifice and you quickly recuperate your money even if you sell your app for 99¢.
I am both an iOS and Mac developer ($99 x 2 per year) and I'm in the black and then some with a couple of apps sold between 99¢ and $2.99.
One of the best features of the app store is that from the consumers perspective its smooth, reliable and just works. Having lots of "cheap" app developers trying to save $100 / yr by hosting their app bin's themselves could results in an unreliable market place that ultimately drives people away from it.