Yes, and look at the reviews. All of them were deceived, they think it's a scam, they demand a refund, they probably feel less safe about buying anything from App Store again, and other iOS developers pay (only slightly) the price of this "scammy" app. Apple should get rid of all such apps – it's better for the business (of Apple themselves and other iOS developers).

Why they approved "live wallpapers", but not "xScreenSaver"? I don't know. It sucks, it seems that their reviews are not consistent.

But just because they made a mistake (like approving "live wallpapers", which IMO is a misleading app created solely for the purpose of milking a few hundred dollars from naïve App Store customers) does not mean that it's okay to do it again.

Edit: look at the other apps created by the same developer: http://itunes.apple.com/us/app/color-texting-for-message/id4... and http://itunes.apple.com/us/app/color-keyboard-pro-pimp-color... and http://itunes.apple.com/us/app/icon-skins-with-builder/id429... - all of them are misleading, making you believe you can do things on the iOS that you actually can't.