I think this is the first time I've understood some of the path to profitability for the iPhone App Store. It's not about making a great app and keeping it up forever. It's about having a hit, milking it for all it's got, then moving on to another app. Even if your app barely took off at all.
For another example, look at Tapulous. They started off with a bunch of small apps, and one of them, Tap Tap Revolution, took off. They've turned that into quite an app with numerous versions. Note that it's not just updates to the app but a bunch of more limited, artist/genre-focused apps. This kind of stuff is the key.
I think having the right PR chops is a huge benefit - visibility is so difficult. Building product anticipation is the key there I think. It is really hard to time things right with the app store approval process so I'm curious if they got their apps approved first and delayed the release date until building enough interest.
Regarding the milking/moving on - one of the most frustrating parts of iphone app dev is the incredibly long feedback loop. The app store means you aren't agile and can't respond to customer feedback as fast as you'd like. I think you're dead on with the model Tapulous used - cast a wide net, nurture what works, and milk the living hell out of it until it dies.
100% Yes you can and should use ad-hoc testers. I think the real problem isn't in finding bugs, but in changing direction/adding value which isn't always surfaced in QA.
The hard part is that if we assume the "live fast/die young" model it becomes increasingly difficult to change/grow the further we get from launch since we are falling further below the more recent apps, below more recent items on blog, social bookmarking, and pr sites, and our buzz is wearing off. Unless we can re-invigorate the buzz the work put in to updating the app might be better spent creating version 2 (w/ it's own buzz and launch) six months down the road.
For another example, look at Tapulous. They started off with a bunch of small apps, and one of them, Tap Tap Revolution, took off. They've turned that into quite an app with numerous versions. Note that it's not just updates to the app but a bunch of more limited, artist/genre-focused apps. This kind of stuff is the key.