The $2.99 version netted us less than $20 in the lifetime of the application. It never was ranked anywhere in the app store and thus was virtually DOA.
I agree it would be great to charge upfront - We didn't have a budget to market these applications to them to show them the value before they reach the store which would be essential in that business model. The freemium model was our only way to leverage the rankings in the store and give parents the ability to see the value in the application before buying.