I agree with the fact that it's not really about the $2 or even how many competitors there are -- it just happens to be that the apps are currently priced about

I agree with the fact that it's not really about the $2 or even how many competitors there are -- it just happens to be that the apps are currently priced about the same as a coffee. My hypothesis is that the bigger question is really one of expectation -- whether the app accomplishes exactly what the user expects it to do (not what the app markets itself to do). The more complex the expected result (ie. coffee -> coffee hit, fart app -> laughs, conversion calculator -> converts stuff, your nifty social app -> ?) the more doubt people have in just throwing down money (regardless of how "small" the amount).