Sure, some of the App Store games you could easily picture winding up on one of those "5,000 Games!" CDs if they were developed on the PC. Those Apps probably should be free or 99 cents at the most. Some of the games and apps could easily be considered full featured desktop products that might sell for $10-$20 on a PC/Mac. It's my assumption that one of the reasons these are NOT desktop apps already is because it's notoriously hard to market and publish desktop software and because the iPhone/iPod Touch has the "IT" factor right now. But just because it's an iPhone app and not a Mac app, why should it cost any less?
Unless of course you consider the extra marketing and publishing costs of putting out games for a PC or Mac into the cost of the product. But does that really make a $20 app a $1 app if you remove those costs?
On the plus side, you can't possibly have a worse piracy problem with your application than China does with everything, and you'll probably eventually do what Chinese software companies do: put the real meat on the server, let everyone have your client for free, and let the users who prefer to Own Their Games Instead Of Renting Them cry to themselves in the corner.