I am an (independent) app developer, and you guys are really scratching at the surface of what we go through. My app "The Amazing! Pocket Comic Book Reader" has a pretty small market. I knew I wouldn't necessarily get rich building it. I decided early on that in the long term ad revenue would be fine for me, but if someone wanted to pay me to get rid of ads I would take that money (my paid app is $.99). I actually also have a trial that is really the ad-revenue version (so I don't time out).
I have a lot of developer friends who have really debated this thing (in a local forum here in Florida). We all have different theories on things and business models. For instance, if you think you can get sufficient numbers to download your app then ads might be an OK way to go. The thing about ads is that as long as someone is using the app you keep making money. With app revenue once the user has purchased it you get no more money out of it.. (so as an app developer you have to decide if you are in this for the short or long term). If your app gives a feature that you think might be in the OS someday then short term is your answer. If you are like me and have something that has long term use then ads might be more your bread and butter (as long as the rates stay up.. which that is another story)
For me, I don't take it personally when someone tells me that they only use my free version, and here's why. With ad revenue I get a check every time my app makes $50 in ads. For the paid apps, I get a check every time I sell $200 worth (so in my case that would mean after 200 sales). Needless to say I get more checks from ad revenue than app revenue.
Anyway, should you buy apps? Yes.. That number means (to me) these are the people who really like the app (you derive a sense of pride and that your app is well received). BUT at the end of the day I will still make money from ads from my "free users." Regardless, I would still develop mobile apps (and intend on doing more soon.. day job keeps getting in the way... darn wife and kids demand that I buy food..)
Jay Kimble