If they raise the prices, they'll sell fewer copies. Given that the number of downloads is the primary way to get exposure on the app store, free games have an edge over paid games, and cheap games have an edge over expensive games.
It's my belief that you'll sell more than 4x the copies at $1 than $4. This higher revenue coupled with the increased chance of exposure in the app store makes it a no-brainer.
That's a horrible thing to believe without testing. There are many experience reports of profit boosts when changing price from $1 to $3, for example.