To me it simply boils down to two things:
1) Many free apps are downloaded just to try them out, and discarded after the fact.
2) Many "novelty" apps like iBeer or iFart are only fun the first few times they're used. After that the novelty quickly vanishes.
Which brings us to a corollary: If you want to create longer-lasting applications, then make them useful. Very, very useful.
I use applications like Stanza, Now Playing, OmniFocus, Shazam, and Shopper almost...