Apple is only doing what it thinks is best for its platform. Sorry, but Apple can kill the entire market by completely removing the ability for ALL developers to write applications for it. Or even worse, just kill the iPhone OS and move onto something else.
It would be one thing if Apple allowed iPhone OS on other manufacturer's hardware and still tried to completely control the experience, but that's not the case here. Apple produces a complete product, not a part of one combined with parts from other sources. The hardware, OS and any applications made available are part of the platform and products.
I don't understand why people have a hard time excepting that? This is not something new in the electronics industry, it's only new to computers. Nobody complained when Apple only partnered with game developers to create games for the iPod, that was even a further restriction as there was no publicly available SDK for the iPod.