I think this is the first time I've understood some of the path to profitability for the iPhone App Store. It's not about making a great app and keeping it up forever. It's about having a hit, milking it for all it's got, then moving on to another app. Even if your app barely took off at all.
For another example, look at Tapulous. They started off with a bunch of small apps, and one of them, Tap Tap Revolution, took off. They've turned that into quite an app with numerous versions. Note that it's not just updates to the app but a bunch of more limited, artist/genre-focused apps. This kind of stuff is the key.