The brilliance of Apple is in the content delivery platforms, much like the reason the 360 has succeeded despite its flaws and how Valve exerts such influence on PC gaming through Steam. The App Store is so much of the reason for iPhone and iPad's success, and it grows stronger every day. Yes, you may be paying a bit more upfront, but the abundance of good, quality and CHEAP software and applications for literally every purpose under the sun more than makes up for it in many people's eyes.
As an English teacher, I can download a free app, for example, that has everything Shakespeare ever wrote, downloading it and accessing it in about 30 seconds. Buying that in book form is about $45. And it certainly doesn't fit in the palm of my hand. Of course, I can access the material on the web, but if I am grading essays or even walking around a classroom, the iPad or my iPhone is so much simpler. I would definitely otherwise have bought the book. $40 of my purchase is paid for in my eyes. And that's one app.
It's just an example. People look at the hardware and say it's not worth it, which can be valid. But if you look at the proprietary nature of the platform and factor in these other components, the price becomes much lower.
Think of the PS3 launching and having all the games being $20 instead of $60. Suddenly the seemingly off-putting price tag doesn't seem so bad. That's the App Store for lots of people.
Can't we all just get along and play our games in peace?
