Interesting that for all the arguments about charging for the iphone/ipad versions, he's not charging for the website service itself (which presumably costs money to run too). Perhaps there's value in 'free' after all?

This is actually a great point--why not provide a free web version and a paid iPhone version of any product?

Flash game developers do this (see Canabalt, World of Goo), so extending the model to iPhone apps isn't a bad idea.