Emulators are indeed legal, and there's plenty of other uses for it than just playing "commercial" games, as others mentioned before me. It also plays a very important role in the preservation of gaming's history, as evidenced by MAME's extraordinary efforts, for example. You certainly can't expect much in this area from publishers, either because of being organizations for profit, or because of having to deal with copyright limitations...
From what I know, the case of Bleem! vs Sony was decisive in this whole context:
http://en.wikipedia.org/wiki/Bleem!
Now, how all this applies to app markets... I'm not sure. Most emulators are free, so if someone is using open source code for profit, that's not cool... I don't know what is exactly being sold here.
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