After a day or so playing with iTunes 9 and the App store on my phone, I think I am beginning to understand what Apple is trying to do...
I think they are trying to use iTunes to cater to the iPod touch and the App Store on the phone for iPhone users. I would be willing to bet that Apple has data to support their changes too... Try to look at things from a consumer's (rather than developer's) point of view. Aren't most iPhone apps downloaded directly from the phone? The iPhone App Store is relatively unchanged. It's probable that most iPod touch apps are downloaded from iTunes. I haven't seen any data to support this theory but I'm sure Apple has.
In many ways, iTunes for apps is now more like iTunes for music. Try searching iTunes music by category (disco, classic rock, 80's rock, etc.). Searching for apps by category is now much more like that. The categories are all still there (including sub-categories for games).
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