Patrick gave a handful of ways they could have tweaked their business model to improve the bottom line. Not developing iPhone games was just one of them.
They wanted to live their passion and they wanted to support themselves off the app. ("We wanted the game to be free but also we want to make a living off of it since we’ve spent 2 years on it.") But they only fought to service one of those goals.
Thankfully, most of us here on HN do things where our passion is something that has enough monetary value to support a family. But nonetheless, "live your passion" is just bad job advice. "Find a way to make your passion work" is much better.