The quality problem with the App Store isn't that there isn't pre-approval – the problem is that they pretty much allow anything.

In all seriousness, the experience of iOS developers who play by the rules, and even those who just push them a little bit, is Apple allows pretty much anything, even if it's low quality. There were some blunders at first, but they're pretty settled now. The last mis-step was the banning of 'widget apps' on the iPad (http://www.macworld.com/article/151680/2010/06/myframe_rejec...), and that was quickly reversed. (it's available on the App Store, go check)

Philosophically, the idea that I have to bend over for Apple's approval is a problem, but in practice all they're really doing nowadays is making sure you're app isn't crashy, and doesn't link heavily against private APIs – hell, most of the time they'll let you use private API. Even that isn't an issue to me, because their private API is private for a reason – it's not done yet, and is subject to further revision that could break compatibility in future OS revisions, so if you're using it you're essentially screwing your customer. Your customer isn't smart enough to know you're are a lazy idiot, they'll just assume it's Apple's problem – Apple sold them the device, and the app, and made the OS upgrade. If they can exercise their power in small ways like this so they don't end up wasting engineering cycles like Microsoft (http://www.joelonsoftware.com/articles/APIWar.html), disassembling apps and writing special cases into the OS to fit apps that insist on breaking the contract of private API being private.

The quality issue is separate from the approval issue. The quality issue stems from the fact that everything appears on the same 'shelf', essentially. Apple can't censor what's appearing in the 'newly released' section in each category, but they can and do feature apps that are good top and center in the editorialized sections of the App Store. There's plenty of people doing great work, making great apps, and making amazing money. iTeleport (interviewed on 37signals here: http://37signals.com/svn/posts/2421-bootstrapped-profitable-...), has cleared over $1 million selling VNC software which isn't even probably the most 'popular' on the store. OmniGroup sold over $1 million worth of OmniFocus for iPhone copies some time ago (I can't find a link), and must really like what they're seeing because they've spent the last 6 months working around the clock on apps for the iPad (OmniGraffle, OmniGraphSketcher, and OmniFocus). tap tap tap earned ~$150k on Convert in it's first month almost a year ago, and they have a wide portfolio of similar quality utility apps. I have no idea, but they're probably clearing at least $250k/month with the expansion in the number of iOS devices and their portfolio over the last year. For every 100 apps that some crapware developer is pushing out, there is 1 absolute gem available.

Another problem is, if you're not a talented developer, it's much easier to dump piece of crap after piece of crap on the store and just hope someone dumb enough to search for random stuff on the store and buys it. Personally, this isn't fulfilling to me, so after releasing 3 relatively simple apps in 6 months, about a year ago I started heavily investing my time in writing software that allows iOS devices to act as networked point of sale machines for restaurants. It's been a rough 9 months since I only have my income from the App Store and working as a waiter to go on, and my income from the App Store dropped off the map after I stopped investing time in working on my old apps. However, when I'm done with this, there's a possibility to make tons of money given the poor state and technology of the point of sale industry, and even if I don't make it, an app selling 2-3 copies a week for $20 a pop makes me a hell of a lot better off than trying to make money selling crapware at $0.99.