I am not sure you are right.
There is one big problem with your article. It's based on the current high positions of Apple's phones in market, Apple and the believe that restrictions on the app-store there will remove too much of the instant-gratification from FOSS for it to make sense to users.
Now your logic is sound, but short-term. Apple's position is already wavering. Every single quarterly results output from the past two years have shown a steady growth in Android adoption, with the expected start of the resulting decline in iPhone adoption already visible in the last quarter and there is absolutely no reason to believe this trend will not continue.
And with android, not only is there no restrictions on licenses for the app-store (nor likely to ever be any) the actual Operating System on the phones is itself open-source (though it's not free software - but it comes pretty close, and free software custom-roms do exist).
Apples has been funging their true results on IOS by including tablet sales - excluding those you see that Apple is actually significantly underselling against Android in the phone market and there is no reason whatsoever to assume that this trend will not repeat itself as several Android tablets hit the market this year.
That alone will change the face of the marketplace. When Android started - we were told it wouldn't work because developers wont' develop for it -after all, the iphone market is bigger and it's already there. This didn't happen.
Then Jobs told us that not restricting development and the app-store meant that developers have too wide a base to develop for and this meant worse apps - that was proven bunk when the very example he cited tweeted to state that it was bunk and they in fact spent LESS developer time on their android version than on their iphone version !
The truth is that what we're seeing on the phones is nothing new at all. In the 1980's Jobs pushed a PC that was limited and restricted, hard to upgrade part-by-part and highly closed up. It sold well. Eventually though the IBM compatibles took over because they were open, this made them not just cheaper to run but more powerful and users ended up demanding that power.
At first - when new technology comes along, the restricted version looks more attractive to users - less abilities mean less to learn, it seems "simpler". WIthin a few years the technology is no longer new, and now users want to use them to their full potential - that's when they start moving to the open versions because without that potential is simply impossible to obtain.
That's what happened with PC's. You can mitigate it a bit like Microsoft did by making your system more and more LIKE the open one (much like Windows 7 bears an uncanny resemblance to KDE4 which is quite a bit older) but Jobs has never done that before and he shows no sign of doing so now.
Google is bargaining on the same thing happening in phones and we're already seeing the start of it. Jobs won't change to avoid it, it doesn't matter to him. Apple will cash in on the early market "less is more" attitude for as long as possible, and then just stop caring about not making money on their phones anymore.
Since the 1980's Jobs found a new trick - whenever you get to the point where those restrictions annoy too many people, stop pushing the product, just get the restricted version of the NEXT major technology wave out first.
Before long smartphones will be common-place, most people will be on their second or third and Android will probably rule the market. Apple will be making a fortune out of some new toy.
That means the part of the market where open-source has the biggest footprint and the highest level of instant gratification is the part that will keep growing. Ultimately the 99c apps won't be there at all.
Finally - your assertion that commercial cost apps are likely to be "higher quality" than FOSS "because of the investment' is utter bunk and you know it.
We've proven that argument false over and over. Sourceforge alone has over 1.2 million developers registered now. If each of them just spends 1 hour a week on their open-source work, that gives the open-source ecosystem more developer man-hours per day than Microsoft, IBM and Apple combined - by an entire order of magnitude - even if you count the developers doing open-source work *at* those companies in both sides of the equation.
Most FOSS is developed with investment and a lot of it is done for profit. Not selling software for a purchase price has never prevent FOSS from doing it for money. So the "investment" argument is ludicrous anyway but even among hobbyist code FOSS has consistently shown higher average quality in almost every field than their proprietory competition.
Photoshop is a rare exception - but this is much more a case of market establishment for a very complex type of software that takes a long time to learn (and thus has very high user inertia) than it is a case of the FOSS alternatives not being of comparable (or better) quality. Both Krita and GIMP are excellent competition for it, and both have stronger features in many areas. Another is cases like business accounting software where legal restrictions place a significant burden on developers, but in the sphere of server-software and general user-side applications the trend is very clear.
As a final bit of proof. Exactly this trend even happened within the FOSS desktop space - KDE and GNOME were comparable in the early 21st century, then GNOME went the way of "ultra restricted" (to the point where Linus called it "Braindead") while KDE went the way of more and more freedom. When KDE4 came out, users were initially very unhappy and GNOME was suddenly praised (for the first time in their history GNOME's userbase actually grew LARGER than KDE's) ... this didn't last.
As we speak the development on the next version of GNOME is going the exact same route that KDE4 did - they shouldn't see the same backlash because KDE already paved the way, but those same features that a few years ago scared users off are now deemed essential by them. Those features were almost verbatim duplicated by Microsoft in VISTA (though they didn't get them usable until Window 7).
In the long run, the option that lets users do the most with their stuff *always* wins. In the short term, technophobia gives the edge to the options that reduce the capabilities. But this is never the ultimate outcome and we have 50 years of computing history proving that.
*FAIL* because the article thinks the world ends in 2012.