The C64 emulator that was pulled from the App Store by Apple for leaving a BASIC interpreter intact has now returned, though we presume it's minus the Apple-offending code. But while it will no longer run your own code, it will run some old-school C64 games, including eight for free with the app, and more coming with in-app purchases. It's got everything you'd expect from an emulator, including original sound and graphics, an auto-save, and the option to play in fullscreen portrait or landscape.

In fact, the only thing it doesn't have is an interpreter, but of course you know why that is by now: Apple doesn't want anyone running code on their devices that they haven't approved through the App Store. The app sells for $4.99 right now, and they expect to release the in-app purchases sometime this December, with no price announced yet.

It was just yesterday that Apple announced they would allow free apps to enable in-app purchases, and developers are already jumping on the "get the app for free, buy the content later" business model as quickly as they can. ngmoco came out swinging, as Touch Arcade reports, with both a free intro version of Rolando 2 out for purchase, with later chapters of the game as add-ons. They've also been working on a shooter called Eliminate, and we're now told that title will be free as well, with extra content to buy later.

The creators of Urban Rivals, an app that is based on a virtual trading card game, have let us know that they too plan to go the free-with-microtransactions model as soon as their app is released, and though we haven't actually heard from Tapulous, Andrew Lacy told us outright that the only reason Tap Tap Revenge 3 had a 99 cent price tag on it was because of Apple's limitation, so we'll expect that app to go free as soon as it can.

Clearly, there's a drive for this model on the developer side, but the question will be just how much this echoes with consumers -- certainly the "download a trial, buy more later" model has worked well on other platforms, so we can expect it to work here on the App Store as well. But on the other hand, just as when the App Store first opened for business, it's a very "wild west" moment -- everybody and their brother is offering up in-app transactions, and they're all of varying prices and quality.

My guess is that we'll see a few "hits" -- a few free apps that everybody buys content for (Tap Tap Revenge 3 is a good guess; considering that because you know most of those songs, there's much less guessing on what the quality of the transactions will give you). At the same time, there will likely be apps that everyone agrees aren't worth the in-app purchase (it's the old story of "horse armor" when Xbox Live started doing microtransactions). Until we find a good balance, where quality meets price, odds are that it'll be tough for consumers to know just what's worth it, and thus tough for developers to convince them that their content is.

One sign that the iPhone development world is starting to mature is that companies are beginning to build the infrastructure necessary for devs to enable push notification and in-app purchasing. Usually these functions require a developer to make a significant investment in server hardware and labor to set up and operate the push and/or purchase servers, as well as to write code to integrate those services into their apps.

I met with Tim Courtney and Chris Grove of KeyLimeTie yesterday at 360iDev in downtown Denver. Their company's new service, iLime, is a scalable solution consisting of highly reliable server infrastructure and a set of iPhone Application Programming Interfaces (APIs) that make it possible for iPhone developers to integrate Apple Push Notification Service (APNS) and in-app purchase easily.

iLime is making it very easy for small, independent developers to test the waters of push notification by making their APIs and server prowess available for free for up to the first 25,000 push messages each month. After that point, the service is charged on a per-push basis on a tiered pricing structure that makes higher volume more attractive. For in-app purchasing, iLime simply charges a flat US$0.05 fee for every content purchase made through their service.

iLime was first announced at iPhone Dev Camp in August. At 360iDev, iLime announced additional features and detailed documentation of the APIs. Courtney also noted that while there are only a handful of apps in the App Store at this time using iLime's services, several hundred iPhone developers have tested and used the services and they expect a significant number of iLime-enabled apps in the near future.

It's great to see KeyLimeTie making the investment in the virtual bricks and mortar that enable push notification and in-app purchasing, so more iPhone devs can take advantage of these iPhone OS features.

One of my favorite apps is Night Stand [iTunes Link]. This app contains a variety of different themes (clock displays) and has an alarm, pretty basic but I use it every day. Last night when I ran it, I found that there was a new clock theme named Glow for in-app purchase. It looked interesting but there was no way to find out the cost without hitting the 'buy' button which I did. Luckily, before it was purchased, a confirmation screen came up with the price of US0.99. This was a bit surprising since US0.99 was the full price of the app which already came with six themes.

This got me thinking about whether in-app purchasing will work or not, or if there is any rhyme or reason to pricing? I wouldn't buy one-sixth of the value of an app for full price and I wonder who would? Last week we ran a story on how in-app buying is not working out so well for Pangea. I wonder if it's working out for anyone?

My feeling is that iPhone apps are looked upon differently than full Macintosh applications. They are cheaper and tend to do one thing only. Night Stand is a clock, it doesn't purport to be more than be a clock. So what should a new clock theme be worth?

I've started viewing apps as casual purchases and at the price I don't expect more than one thing, which if done well, is worth the buck. So I'm not seeing the value of highly priced in-app sales. I can see the reason for some expensive apps charging for major functionality increases, such as Navigon when they added a $US20 live traffic option to their $US90 Mobile Navigation app, but that seems to be the exception and not the rule.

I would guess that extra gaming levels would be an expected revenue source, but I just don't see the majority of people spending enough time with a game app to run out of levels and buy more.

Take the poll below and then comment on your feelings on in-app purchasing. Will this turn out to be something big, or is it just another solution looking for a problem?

God bless Smule. I panned their Ocarina app way back, but since then they've pushed right along without me, releasing idea after idea on Apple's App Store. And I think that, though the Leaf Trombone didn't really capture my attention, this one might finally be the big winner in my book: they've released I am T-Pain, an app that will automatically Auto-tune you into the style of some of the rapper's top songs, with more purchaseable within the app. There's even a "freestyle" mode, complete with a few unreleased background tracks to jam with -- as you can see above, all you do is talk into the iPhone's mic, and you can autotune the news or whatever else you want. Shawwwwty!

Silly? Maybe, but they're going to sell a million of these, and given that Smule's apps tend to be easy to pick up and fun to play with, even people who aren't familiar with T-Pain's work will probably get the app just to sing a few bars to see what it sounds like (you can also send those messages off to Facebook or email as well). And Smule is moving right up into the iPhone 3.0 era: the app comes with four songs, and there are four more available to purchase in-app, along with even more (and more popular: Kanye's "Good Life" and the Lonely Island's "On a Boat" track are due out soon) songs coming, complete with lyrics and auto-tune settings and timings in the future.

Maybe you're laughing. Maybe you think this is dumb, and you've already had enough of auto-tune on pop radio, and don't really want it in your iPhone, too. But trust me on this one: Smule is a company that's made silly music experiences on the iPhone extremely popular, and having T-Pain's tunes and auto-tuning abilities (officially from the company behind the pro version, too) available in this app is going to make it big, no question. The app's available right now for $2.99, so pick it up if you're feeling the beat and want to sing, even if you can't. Yeahhh-eeeyeaahh-yeah.