After thinking about this quite a bit, I’ve finally boiled my take on the AppStore down to this:
The problem with the AppStore is that it is the only way to distribute apps for the iPhone.
If developers could sell apps for the iPhone through their web sites, with download links to download apps direct to the device, the AppStore issues would be an annoyance; but only that.
There is no technical reason not to allow this. Perhaps that is why it is so frustrating.