For me, I chose to focus on the tablet OS. While there are a few tablets out there running the phone OS, the trend over the next 6 months will be a whole new set of tablets running Honeycomb. I'd rather work on supporting that platform properly than diverting attention to support a setup that will be a tiny fraction of the market in about a year. I have no intention of bringing Newsr or TweetComb to earlier versions of Android for this reason.
There are Twitter apps, and Google Reader apps for that matter, which run on the phone OS just fine. I saw a market opportunity to make something for Honeycomb, using Honeycomb-specific features (that aren't included in the compat library), for both types of application.
If TweetComb isn't worth $2.99 to you, then I understand. I have put, and will continue to put, a lot of time and effort into it. I've done this with Newsr and will continue to with both. I'm not a company that can afford to put out free applications and hope I gain substantial market share to become attractive to acquisition. I'm a solo developer, with a full time job and a full time family, so for me the value proposition is making a couple bucks here and there to justify the serious amount of time and energy I put into developing Android apps. I have gotten a ton of positive feedback from my various applications, and it's been a really worthwhile endeavor for me.
I hope that answers your question on some level.
Edit: You know, and with all of that said, I am just a solo guy here in my home office making decisions and moving forward. Could I have made a mistake with TweetComb's price? Absolutely. Maybe I should have done any number of things. Frankly, I question every decision I make with my apps because I _do_ care. I put so much time and effort into them because I _do_ care. I want your input, I want everyone's input. It's not set in stone that I'll never have a free version, but right now something told me to put it up for $2.99 as I have with my other apps. Maybe that was a mistake, or maybe not. All I can say is I made a decision and moved forward with it. I'll second guess that decision, and every other, forever.