Exactly, the problem is that I, as a hobbyist, can't scratch personal itches by writing and giving away little programs that run on such a device.

Most of the software I ran on my first few computers was freeware, downloaded from BBSs at 2400baud. The barriers to entry for hobbyists to get little itch scratching programs up on the app store at $0 makes it not even worth the effort.

And the shame of it is that the iPad is the perfect kind of hobbyist platform, small, constrained, knowable. An organization putting millions of dollars into a piece of software for it isn't likely to make something really that much better than one or two teens banging out code in the bedrooms over a few weeks.

I feel that this is the key point: distinguishing between open and open source. Openness, in terms of economic freedom, allows choice and therefore increases competition. As you say, this leads to innovation and is better for the consumer.