I agree that they could release a small handful of Dead Space-quality games and it might work. I believe it was Activision who said that they would never release a full-fledged Call of Duty game on the AppStore because the market was over-saturated, and it is. When you release 20 titles a year, you are both spreading yourself too thin and competing with yourself. How many sales did Gameloft lose when the released 5-6 premium games during last year's Christmas release window? People who had to decide which Gameloft game to purchase, because they could not afford all of them at once?
With that said, scrapping this whole premium model entirely and just releasing a bunch of half-assed Freemium games, like Glu Mobile, is the easiest and cheapest way to go. I hope EA maintains a semblance of their integrity and doesn't pull what Glu has done. I can still remember Glyder 2. What happened to you, Glu? Why did you sell your creative, artistic souls to the capitolistic devil?