I'm not sure if it's because free, ad-supported apps are often crap, or because in-app advertising just doesn't seem effective, but this is honestly surprising: top 100-ranked free apps can make $400-$5000 a day.
At least, according to AdWhirl, a company that supplies advertising solutions for about 10% of the top 50 apps in the App Store. Of course, breaking into an iTunes "top" list is no small feat, the types of apps that can display advertising are limited, and such ads can alienate users. But with the right product, it looks like you might not even have to bother with Apple's pokey App Store payment scheme.
Depressingly, AdWhirl presents iFart Alert! as one of their great success stories. It makes over $2000 a day, from farting. [Techcrunch]