I put my first app into the App Store last July and had it selling for free until 2 months ago when I set it to $1.99. People continued to buy it even though I don't advertise it.

After that success (2 figure revenue!), I built another app and put it on the App Store for $9.99. People are downloading that as well. I admit that I am making more off of contract work, but based on my estimates the App Store converts really well, even at >$5 and has the potential to be profitable with paid apps.

(anecdotal evidence based on my sales of http://free2goapp.com/download)