I thought this paragraph was particularly insightful:

"I learned a lot from releasing my first iPhone app: Six-Pack Equivalent Calculator... primarily that you shouldn't release an ad-supported app that does not have high user engagement times. The app was a utilitarian "one use and quit until you want to use it again" type of app. I can see an RSS reader or a Facebook client being free with ads, since there's a long user engagement period, but this revenue model simply didn't work with my application type."

It's a pretty good 'rule of thumb' on when you should or shouldn't consider ads as your monetisation method.