No, i don't think so. It's kind of a cop out for apple, and, truthfully, I'm surprised. Apple's initial nonsense answer to "Will 3rd party devs be allowed?" talked about them not wanting to overload the cell data networks. This announcement belies that statement since now ALL 3rd party software REQUIRES network activity. Want to write a game? Network based. A todo list? Network based. Don't get me wrong, I see a lot of value in this paradigm, and most apps can benefit (e.g. see your todo list anywhere), but at the same time, I think it's silly to not have any avenue for entirely local apps.
And I do worry about security, with either paradigm. I have no doubt that Acidus (and therefore 10 or 20 other people who are far less scrupulous) will find a way to pwn people's iPhones within about 45 seconds. This is going to be Apple's biggest problem with the iPhone, i think.