We have a game that's currently in review by Apple that hopefully will give a sense of just how good these games can be:) The median for games on the App Store is also a lot higher than $200 - in the thousands of dollars. I think we'll break even fine on plenty of games and by virtue of opening up iOS game development to so many potential talented developers we'll have the opportunity to publish real gems.
Only time will tell whether the model works. I'm curious - what cut would you say we should take?