"but the vast majority of iPhone users are not children"

App Store is not just for iPhone, its for iPod touch too, And a huge number of children and teenagers use iPod touch as their music player and nowadays as portable gaming device.

“avoid applications that degrade the core experience of the iPhone”.

If you have ever downloaded any app from Android market, you will know what Apple mean by degrading core experience. Most of the Android apps just dont work as advertised. Its frustrating even to try free apps from Android market. Or even if Android market supports returns for paid apps within 24 hours. The kind of crappy apps Android market has, has definitely degraded my core experience of using my Android phone.