Without small developers, there would never have been Angry Birds, Tiny Wings, Temple Run, and countless other (when released) indie games. Ditto for apps.
I think what you mean to suggest is that Apple should raise the bar for app approva. Given the accumulation of thousands of crufty, poorly-designed apps, I would totally agree with this.
My point is now that they have Angry Birds, etc. they may not really need small developers. Back in the late 1980's and through the mid 1990's there were lots of independent computer shops building PC's in the U.S. The industry changed and those shops are largely gone.
What the report indicates is that the gold rush is ending. Yes there's still mining, but it's increasingly being done by Rio Tinto with giant trucks, not someone squatting in a stream with a pan.
Apple needs to allow for off-Appstore installs (off by default is fine). Then they need to have a program like Steam's Greenlight where the community chooses what should be considered.
I think what you mean to suggest is that Apple should raise the bar for app approva. Given the accumulation of thousands of crufty, poorly-designed apps, I would totally agree with this.