Square Enix found out how well a high priced iOS game works out. They tried charging $15 bucks for a game only to see take rate be EXTREMELY low. The game was fine, but the price was way higher than it should have been. They would have made more selling it for $2.99.
As for the way the iOS store is setup, its very easy to go through games that are not in the top 10. If what you say is true, the top 10 would never change.
Companies pay other companies to get them into the top 10 or top 50. Games would give you extra money or ammo or health packs etc. if you installed another app or game which was listed as free. The free game or app was paying the first one for each install they got because they could break into the top list that way.
Apple has recently cracked down on this practice. There were also screenshot scammers.
http://www.insidemobileapps.com/2011/04/19/apps-apple-rejected-pay-per-install/
http://gizmodo.com/5974817/apples-app-store-is-finally-cracking-down-on-the-screenshot-scam
Still what I am saying is that the games that are higher priced, but are higher quality too, will have a hard time presenting themselves against all the free and $1-$3 games out there and all over the top lists (be it top action/racing/fighting/arcade etc, top free, top paid).
You say they would have been better off selling it at $3, well maybe they felt that the time and effort were worth or should be worth more. As the mobile chips get more powerful you will be able to create bigger games. Games similar to the Vita or 3Ds. WHen you do that and want to release it on the iOS or Android stores, you still may take the same amount of time and money to develop the game as you would for a standard console game. That isn't cheap, so companies for sure would want to charge a bit more for the game because it's higher quality than fruit ninja HD and took more effort to create. That type of game would likely not do well.
One of the main problems. People view phones and tablets as media consumption and communication devices with the additional benefit of cheap games to waste a few minutes when you have a bit of time on your hands. People view the 3Ds or Vita etc as purely gaming systems.