I think you're confusing smartphones and feature phones. You're right that the experience of apps on feature phones was lackluster (it still is actually). The iPhone helped catapult smartphones into the mainstream, but there wasn't a lack of smartphone software before the iPhone. Palm, Symbian and Windows Mobile (and BlackBerry to a lesser degree) all had a wide array of apps available before the iPhone was ever announced.
It's pretty clear to most people that the smartphone app market that exists today is qualitatively different than the one that existed before the App Store. I think that's the point the parent was trying to make.
Definitely. The emphasis now is to get your potential users to spend 99c as many times as possible (with "do one thing" and shiny graphics; see "fart apps"). Previously, everything was either free, or something you found for $20 at some commercial vendor's website.
