Actually there's a third type, free games with micro transactions.
I have yet to actually pay into anything like that on mobile, but as with all things its can be done in both good and bad ways.
I guess you could also consider the limited free to play model.
Where you get a few teaser levels to try out the app.
I think with that you really have to have a superior product, as that's the main selling point....pretty much what Ash, and Tom are doing.