I Am T-Pain is the second on Top Grossing list. Yes, you do not understand Smule apps, but it seems that Smule understands how to make lot of money with the iPhone :-)
By the moment it is no possible to superimpose a layer of content over the real world in an iPhone. We will have to wait to new OS release (3.1), scheduled for the next September.
Currently the iTunes store rates apps by the number of downloads, regardless of price. That's crazy. If all cars were ranked by the number sold, the BMWs would have to lower their prices or become invisible through lack of exposure.