I think when Apple launched its iTunes app store a year ago, it didn't expect this level of success. The growth has been phenomenal. But given the growth trajectory, there is bound to be a lot of growing pains. Hence, all those complaints from developers whose apps sat in approval purgatory or simply cast out of the bounds of the app store for one reason or another.
The latest uproar from bloggers and media (including an ongoing FCC inquiry) is the rejection of the Google Voice app. That has turned on a lot of heat on Apple. I'll leave the story out in this post but the bottom line is that all the attention on Apple is making it difficult for them to reject any apps that the bloggers will perceive as anti-competitive behaviors by Apple or ATT or Apple's approval process gone awry again.
But at the end of it all, I am not sure this has impacted the iPhone's popularity with the mobile masses. I've asked people with iPhones about what they know is going on with the app store politics and no one I know has any idea of the struggle going behind the scenes nor do they care when I told them about it.
Personally, I love for Apple to be more liberal with its approval process. It currently has 40 or so personnel working on this. I'm sure Apple can afford to hire another 40 to help streamline the process.
So, at the end of the day, Apple will approve Spotify and Rhapsody simply to avoid added attention. Also, according to jkOnTheRun, there is a button that will allow the user of Rhapsody to buy the music they like from iTunes.