"Apple board member Art Levinson told Isaacson that he phoned Jobs “half a dozen times to lobby for the potential of the apps,” but, according to Isaacson, “Jobs at first quashed the discussion, partly because he felt his team did not have the bandwidth to figure out all the complexities that would be involved in policing third-party app developers.”

Apple had already established a model for selling third party software on the iPod video line through iTunes -- with select partners only.

When WWDC 2007 rolled around, after the release of the iPhone, Jobs presented web apps as the solution for developers, without the need for an SDK. It was only after months of sustained outcry from the development community, and the nascent jailbreaking scene, that Jobs announced that they would prepare a public SDK for the next year, after they decided on a method of signing and sandboxing applications.

I seriously doubt that jailbreakers invented the smooth experience - they just likely unlocked the functionality that existed before Apple was ready to push it out (I'm guessing Steve wanted apps in the store at launch).