I have mixed feelings about IAP...
I am sort of an advertisement-resistant personality to start with. I don't like the feeling that I'm being manipulated or subtly cajoled into something. I feel like a lot of IAPs are just that.
However,
the fact for almost a year, I'm extremely tempted to buy a special fancy Disc in Disc Drivin' tells me that if the game is good enough IAP works. Judging by how many people I play with who have fancy discs, it's working pretty great.
I hate when IAP is dependent on winning a game or when the game is trying to sell you stuff every five seconds. I like the "one IAP unlocks everything" concept, kind of takes me back to the old 'shareware' days, which I think is a very fair way to distribute a game.