As the father of a talented 3 year old: yes it does.
If clever children are the main argument against not requiring password confirmation, it sounds like "always require password on purchase" could be a great Parental Controls toggle.
What if your kid downloads an app that tracks your location constantly? Should apple make you enter your password when the app asks for permission?
Android Market / Play solves this by letting you set a PIN that's required to make purchases (which does not include Free app installs). It seems like a good compromise.