That's the way I see it as well, but then what happens is that players get upset when an iAP or DLC is something they felt should have been included in the free game to begin with (What? I have to pay $1.99 to unlock Chapter 5?) .
So the developer gets screwed either way. If you make them pay up front, good luck getting downloads. If you make the game free but have ads, iAP or DLC, you'll get the downloads but also maybe some resentment. It's a tight rope to walk. Personally, I'd rather pay a one-time fee, but for that to be reasonable it is imperative that a developer have a demo.