At my game studio, all our games are freemium models. They are implemented pathetically, but since the games are targeted at young children whose accidental clicks generate our revenue, The Boss has kept the same model in place.

There have been a few freemium games (Jetpack Joyride, Icecream Jump) with IAP models that changed only aesthetics. They were completely free to play as much as you want, and would only alter visual effects: paying and non-paying players would get the same gameplay experience. Some other ones, like Bubble Mania or CSR Racing, use an energy system that limits how much you can play per day. Once you run out of energy (bubbles, gas, etc.), you had to put it down for several hours so your energy regenerated, or IAP the energy to continue. So same game for paying and non-paying, but paying players got to play longer.

Blockheads, for iOS, was a time sync. Earlier versions would pause what you were doing, so leaving and returning to the game hours later was no different than just continue playing and waiting out whatever task you were doing. Recent changes to the game now let you "do stuff" offline, but its biggest IAPs came from speed-ups. If you had the time and patience to wait, it's 100% free. If not... $$ cha-ching $$.

All these games listed have grossed in the millions for their IAPs. They are probably a small handful of games that have done IAPs "right" -- where players want to pay for IAPs to enhance their games.

That being said, the IAP model beats those annoying ads in my book. And as I've only seen the subscription model work for either very large games (World of Warcraft) or a very small handful of indie games (AnimalJam), I would think that it would be incredibly difficult to pull off correctly.

What is the scale of your game? What is your target demographic?

Yes, you're allowed to do that as long as you don't call it "Lite" (which is the word I was looking for instead of Demo.)

@Jonatan Hedborg: My sister has an iPhone 4, my mom has a first gen Kindle Fire. Any reason the Kindle Fire can run the game noticeably better than the iPhone 4? (maybe take this as a sign to put the game on Amazon's App store as well, so people with Kindle Fires don't need to install from some random web site that got the APK)

The kindle fire is a tablet, but its not really "high performing". The nexus 7 is a lot faster, and about the same price.

Wait, the Fire is better than the iPhone 4 in terms of power? (I do know the Nexus 4 is better than the Nexus 7, personal experience there )

Speaking of, I really need to look into what background tasks just out right kills performance on my Nexus 7. It has a habit of running slow at the oddest of times, moments in which I'm sure my Atrix was fast at.

Well, you could always pay

If I recall correctly, we are working on alternative methods of getting tickets from friends (not via facebook).

But yeah, the model isn't for everyone.

Oddly enough, from the few times I've used a Nexus 4, it has seemed less responsive than the Galaxy Nexus which is a year older. I just broke the screen on my Galaxy Nexus and was offered a free "upgrade" to a Nexus 4, but instead I'm opting for getting the existing phone fixed. The wireless charging was tempting, but I prefer performance.