Yesterday Apple sent out a mass email to registered iPhone developers informing them of a policy change regarding free apps and the use of In-App Purchase.
Now you can use In App Purchase in your free apps to sell content, subscriptions, and digital services.
You can also simplify your development by creating a single version of your app that uses In App Purchase to unlock additional functionality, eliminating the need to create Lite versions of your app. Using In App Purchase in your app can also help combat some of the problems of software piracy by allowing you to verify In App Purchases.
The change is a major step for developers who offer "lite" versions of apps for free, they will now be able to implement In-App purchase to effectively offer trial versions of apps that will require purchasing after a certain period of time.