Harry,
while I do agree with you that the App Store is a good thing in itself because of its safety and ease of use, Apple could allow an independant "Indie Store" where you would install apps at your own risk and loose your "warranty for a proper functioning os and software (mind you, not hardware!)"- that means if you brick your phone, you have to fix it yourself or pay Apple to fix it for you. Manage access to the "Indie Store" via parental controls, and your kids should be safe (or as safe as they will be untill they jailbreak the phone). Add a legal disclaimer and most people would not buy from the other store, except for those who really want to.
If you are using a mac or pc at home, you will know about freedom of choice and personal responsibility as you can install any program you wish- including malware...
cheers,
kaas
p.s.:@rhadin --> she is 9 years old and still sweet as a puppy